With governments around the world enforcing serious restrictions on individuals refusing to declare the correct amount of tax due on income from their offshore accounts and assets, it has become all the more important for taxpayers to document all taxable income on overseas investments.
Fortunately, the HM Revenue and Customs (HMRC) introduced the Worldwide Disclosure Facility (WDF) on 5th September 2016. This allows the majority of taxpayers to voluntarily make a full disclosure of all information related to taxable income earned from offshore accounts and assets.

Why Should I Make a Disclosure through WDF?

Close to 100 countries have agreed for the multi-lateral exchange of information as per the directives of the Organization for Economic Co-operation and Development’s Common Reporting Standard (CRS). The CRS allows for greater tax transparency, hence, following the closure of all HMRC offshore facilities on 31 December 2015, the HMRC provided incentives to people to come forward and resolve whatever tax issues they may have.
The aforementioned regulations are stipulated under the ‘Requirement to Correct’ change which is a legal obligation (included at Section 67 and Schedule 18 of the Finance No. 2 Act 2017) on behalf of the taxpayer to correct the situation of undeclared taxable income related to offshore interests by disclosing all information to the HMRC by a certain date. Beyond this date, severe sanctions are expected to be applied.

Am I Eligible?

Any individual with a UK tax liability (unpaid or omitted tax) related to any offshore interests is eligible to use the WDF. These include:
  • Income from a source in a territory outside the UK
  • Assets located outside the UK
  • Any activity carried out in a territory outside the UK
This also relates to any funds that may be transferred to a territory outside the UK and on which unpaid or omitted tax is due. Any non-UK residents are also liable to make a full disclosure using the WDF if they possess any UK tax liabilities.

What is the Process?

The first step is to notify the HMRC through the Digital Disclosure Service (DDS) and provide the following information:
  • Your name
  • Your address
  • Your National Insurance Number
  • Your unique taxpayer reference (also known as a ‘UTR’)
  • Your date of birth
  • The name, reference and contact details of the agent (if any) who is acting for you
Once you have let the HMRC know of your intention to make a disclosure, the HMRC will provide you with your unique disclosure reference number (DRN) followed by a Payment Reference Number (PRN) for any payment you may owe. After this, you will have a period of 90 days during which you will have to:
  • Gather all the information you need to fill in the disclosure
  • Calculate the final liabilities including tax, duty, interest and penalties
  • Fill in your disclosure using the unique disclosure reference (DRN) that will be provided to you by the HMRC once you notify them.

Terms and Conditions

In order to save yourself from a higher penalty and not have details of your disclosure be shared publicly, it is important that you provide a complete and correct disclosure as well as cooperate by supplying any further information the HMRC may ask for. Failure to do so will result in the following:
  • The application of a higher penalty
  • The opening of a civil or criminal investigation
  • The publishing of your details on the GOV.UK website

What are the Circumstances in Which a Higher Penalty Will Apply?

The HMRC will possibly charge a higher penalty when:
  • You are already under enquiry by the HMRC
  • Your disclosure is connected to a previous, inaccurate or incomplete disclosure which prompted an investigation
  • You refuse to follow the existing legislation on calculating penalties
In such cases, as per Article 6 of the European Convention on Human Rights, you are given certain rights. These include:
  • Seeking help from a professional adviser
  • Having the matter of penalties dealt with without reasonable delay
  • Not to incriminate yourself

  

How Can We Help?

Our team can help guide you through the WDF process with great ease, we are able to provide top-quality assistance to our clients for any offshore non-compliance issues they may face.
Contact us today!