HMRC have offered a number of disclosure facilities over the years and several of them have related to offshore matters. All of the ones relating to offshore matters were closed on 31 December 2015. The UK Government has been instrumental in encouraging a number of countries (including many tax havens) to exchange information on a unilateral basis and the last of these will have provided information by September 2018.
HMRC are currently in consultations about a new UK law which will require all people to review their tax affairs where they have offshore interests and to correct these by 30 September 2018. After this date then HMRC have stated they will impose significant sanctions on those who fail to correct, including penalties of 200% of the tax due and naming and shaming any individual who has not reviewed their tax affairs.
In order to assist people in making a disclosure of any offshore errors HMRC introduced the Worldwide Disclosure Facility.
HMRC's Worldwide Disclosure Facility (WDF) runs from 5 September 2016 to 30 September 2018. It's for anyone wishing to disclose a UK tax liability relating wholly or partly to an offshore issue.
In order to be considered for the Worldwide Disclosure Facility an individual (or business) must have:
In addition if someone qualifies to take part in the Worldwide Disclosure Facility they must notify HMRC of any UK tax liability if all taxes have not been paid in the UK:
In order to take part in the disclosure facility, HMRC will need to be notified that you will be making a disclosure. This is a simple process where details of address, date of birth and national insurance number need to be provided to HMRC.
HMRC will then provide a reference (and payment number) and they then allow 90 days to:
This is a very complicated process and it is our opinion that 90 days is unrealistic in all but the simplest cases.
In addition to calculating the figures HMRC expect people to self-assess their behaviour in relation to their tax affairs and then work out if they must pay additional penalties due to the jurisdiction in which their assets were held. If the assets were held in a number of different jurisdictions then each has to be considered separately. These decisions require a detailed understanding of the tax law and penalties and it is our view that for HMRC to ask the average taxpayer to do this is unfair.
A joint disclosure cannot be made under the Worldwide Disclosure Facility so, if there are say a husband and wife, each will have to make a separate disclosure, and if there were also issues with a company they owned a separate disclosure should be made by the company.
HMRC have stated that if people get their disclosure wrong then they will impose increased penalties and if there are material errors, consider them for prosecution. It should be noted that there is no guarantee of not being prosecuted with regards to the Worldwide Disclosure Facility but it is not expected that HMRC will prosecute anyone who makes a full and correct disclosure.
There are no real advantages of the Worldwide Disclosure Facility over the Contractual Disclosure Facility (where there is a guarantee of not prosecuting for tax frauds admitted at the start of the process) in terms of reduction in penalties or time periods for assessment, and therefore the Contractual Disclosure Facility may be a better option for disclosures where matters are more complicated.
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