HMRC gives an opportunity to individuals to come forward voluntarily and disclose a previously unknown source of offshore taxable income. Individuals get a chance to sort out their taxes and bring their financial affairs up to date. Replacing the Liechtenstein Disclosure Facility, the Worldwide Disclosure Facility was introduced by HMRC in 2016. The facility can be used by individuals who want to disclose a UK tax liability that relates wholly or partly to an offshore issue, i.e., any income arising outside the UK, assets situated or held outside the UK, activities carried on wholly or mainly outside the UK or funds connected to a UK liability transferred outside the UK.
An offshore issue, therefore, includes unpaid or omitted tax relating to:
• An income arising from a source in a territory outside the UK
• Assets situated or held in a territory outside the UK
• Activities carried on mainly in a territory outside the UK
• Anything having effect as if it were income, assets or activities of a kind described above
If you have an undisclosed offshore income, you must notify HMRC about the unpaid tax as soon as possible. You will have 90 days to calculate and pay what you owe. Therefore, within 90 days of notification, you are required to make a complete disclosure and pay the amounting tax, interest and penalties. The deadline of 90 days can, however, be extended to 180 days where the disclosure is exceptionally complex. Under the WDF, along with an offshore issue, you must also disclose onshore liabilities if any.
The WDF will allow you to fully declare offshore income going back as far as 20 years. The principal benefit of this is that any penalties payable on unpaid tax are significantly lesser than filing through tax returns which will also include late filing penalties as well as tax geared penalties.
Disclosing to HMRC
Once you intend on making a voluntary disclosure of your unpaid tax on your undeclared offshore income, the next step is to NOTIFY HM Revenue and Customs. Once notified, HMRC will acknowledge the disclosure within 15 days and will tell a course of action within 40 days of this. You can notify HMRC using the Digital Disclosure Service (DDS).
On being notified, HMRC will give you 90 days within which you will be required to gather the information you need to fill in your DISCLOSURE and calculate the final liabilities including tax, duty, interest and penalties. Fill in your disclosure, using the unique disclosure reference number (DRN) given to you when you notify HMRC.
Why should you make a correct and complete disclosure?
By fully cooperating with HMRC and making a right and complete disclosure, you will be liable to lower penalties. However, failing to do so along with the refusal to send in additional information can lead to:
• HMRC can subject you to a higher penalty than they normally would if you would provide the information voluntarily
• HMRC can open a civil or criminal investigation against you
• HMRC can publish your details on the HMRC website
In some serious cases, HMRC may also choose to launch a criminal investigation against you. Receiving a letter from HMRC stating that you are being invested for an unpaid tax under the WDF can have damaging consequences on your professional and personal lives.
How Can we Help?
We offer our guidance on making an offshore disclosure under the worldwide disclosure facility to help minimise your tax liability. Our team of tax investigation specialists consist of tax law experts who possess an in-depth knowledge of the area. They study and analyse your situation and advice you on the best way to approach HMRC to disclose the tax on your offshore undeclared income. We have extensive experience in making a voluntary disclosure to HMRC having assisted numerous clients. From notifying HMRC to the initial disclosure, through to negotiating the final settlement and payment terms, we will guide and manage your voluntary disclosure to get you through the entire process swiftly and effectively.
Our team of tax disclosure specialists can assist you by:
• Manage the entire Worldwide Disclosure Facility Process and taking full control
• Submission of the initial disclosure report to HMRC
• Regularly communicate with HMRC in relation to your tax disclosure and update you on progress
• Communicating with you and your tax adviser/ accountant in relation to the tax disclosure
• Coordinating meetings with HMRC
• Updating you on the progress of the voluntary tax disclosure and advising you on tax liabilities
• Working effectively and negotiate the lowest possible tax and penalties are paid
• Filing a full tax disclosure with HMRC and following up to ensure it is agreed in full
• Setting up a convenient payment plan on your behalf