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Worldwide Disclosure Facility

Want to learn more about the Worldwide Disclosure Facility before arranging your free consultation? There's lots of useful information on this page covering:

  • How to notify HMRC you want to disclose
  • Benefits of disclosing voluntarily
  • Penalties for offshore income tax errors

What is the Worldwide Disclosure Facility?

In order to assist people in making a disclosure of any offshore errors HMRC introduced the Worldwide Disclosure Facility.

The Worldwide Disclosure Facility (WDF) is suitable for anyone wishing to disclose a UK tax liability relating wholly or partly to an offshore issue. Indeed where HMRC have received information they will often write to individuals suggesting that they review their tax affairs and that they may wish to use the Worldwide Disclosure Facility.

Often the people who receive the letters have paid the tax in the jurisdiction in which the asset is held and not realised that they could be liable for UK tax on the income.

HMRC are getting this information because most countries have agreed to an exchange of information protocol where if they have a UK address on record they automatically send information to the UK tax authorities.

It is our understanding that it is a snap shot of a person with offshore assets detailing income from the assets and the amount invested. Recently at the time of writing there has been a surge in information from India relating to investments and Australia relating to rental income.

Taking part in the Worldwide Disclosure Facility

Most people have paid their taxes in the country where the asset is held and do not realise that there is potentially a liability to tax in the UK.

In addition to the tax and the interest even where someone has not deliberately not notified HMRC of the liabilities they will still face a tax bill going back to 2011/12 (and earlier if they have not completed tax returns in the UK) and penalties of up to 200% of the tax if the matter is not dealt with properly.

Therefore understanding the complex tax rules about assessing periods and where amounts can be claimed against the income is extremely important as this knowledge can in some instances save considerable sums in tax and penalties.

In order to be considered for the Worldwide Disclosure Facility an individual (or business) must have:

  • Income arising from a source or territory outside the UK
  • Assets situated or held in a territory outside the UK
  • Activities carried out wholly or mainly in a territory outside the UK

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:

  • Disclosures have to be made via the online Digital Disclosure Service and can be done by an individual or an agent acting for them

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:

  • Obtain the information needed to complete the disclosure
  • Calculate the final liabilities including tax, interest and penalties
  • Complete the disclosure
  • Make payment of the tax due

How does the Worldwide Disclosure Facility work?

This can be a very complicated process and it is our opinion that 90 days is a challenge in all but the simplest cases. The deadline is not legally enforceable but most cases we see involve single investments and it is possible to meet the deadline. Where things are more complex HMRC are flexible in allowing further time.

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 as it could result in someone paying more tax and penalties than is necessary.

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 from HMRC 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.

Our approach to WDF cases

We have done hundreds of WDF disclosures for clients and it is our aim to get each client through the process as smoothly as possible. As the disclosure form is digital all it allows is to fill in basic details like the tax, interest and penalty, reasons for choosing the penalty and some basic information.

Whilst this gives HMRC the basics they often then write and ask various questions, many of which are not relevant. We therefore take the approach that we write early to HMRC explaining that we will be writing to them at the time the disclosure is submitted with an outline of what work has been done, providing a copy of the tax computations and sufficient information for HMRC to accept the disclosure rather than ask many questions.

We have found that in most instances this means early acceptance of the disclosure by HMRC meaning our clients can put the matter behind them.

Here to help, not to judge
Tax Investigation Specialist
Scott Gilbert, Partner and Tax Investigation Specialist

"We understand that people sometimes make mistakes in their dealings with HMRC and that HMRC make mistakes in dealing with taxpayers. Many people do not know how to deal with HMRC or who to turn to for help resolve the tax dispute.

Our firm of tax advisors specialise in resolving people's problems with HMRC. We have extensive expertise in dealing with all forms of tax investigations and tax disputes as well as with taking matters to the Tax Tribunal where agreement cannot be reached.

We deal both directly with the individual who is under enquiry and also work with many firms of accountants supporting them in dealing with HMRC disputes and advising them on how to handle HRMC to get the best result.

The fact is that proper management of HMRC is the best way of reducing the tax, interest and penalty as well as the time taken in resolving any tax dispute.

Our expert team are none judgemental and rigorously defend your position within the scope and parameter of the law. We take control and manage the process to minimise the interruptions that any form of tax investigation causes to an individual's life and business."