UK and International Tax news

HMRC Launches Worldwide Disclosure Facility

Monday 17th October 2016

HMRC recently launched a new worldwide disclosure facility for taxpayers who wish to disclose a UIK tax liability that relates wholly or partly to an offshore issue.

Until 31 December 2015, after which all offshore disclosure facilities closed, HMRC gave incentives to encourage people to come forward and clear up their tax affairs. Before automatic exchange and new sanctions come into force, the WDF will be the final chance to come forward before HMRC uses CRS data and toughens its approach to offshore non-compliance.

The facility opened on 5 September 2016 and is available to anyone who wants to disclose a UK tax liability that relates wholly or partly to an offshore issue. This may include unpaid or omitted tax relating to:

  • income arising from a source in a territory outside the UK,
  • assets situated or held in a territory outside the UK,
  • activities carried on wholly or mainly in a territory outside the UK
  • anything having effect as if it were income, assets or activities of a kind described above, or
  • funds connected to unpaid or omitted UK tax not included above, that have been transferred to a territory outside the UK or are owned in a territory outside the UK.

If, at any time, HMRC knows or suspects that assets or funds included in the disclosure are wholly or partly made up of criminal property, HMRC has discretion to refuse the application to participate.

Notification should be made using HMRC’s Digital Disclosure Service with disclosure of name, address, NIC number, UTR, date of birth, and the name, reference and contact details of any tax agent acting for the taxpayer.

After notification, the taxpayer has 90 days to gather the information, calculate the final liabilities including tax, duty, interest and penalties, and complete the disclosure with the unique disclosure reference number provided by HMRC on notification. HMRC may ask for extra information in support of the disclosure to be used to check its accuracy and completeness.

To be able to use the WDF, the taxpayer must be eligible, must make a full disclosure of all previously undisclosed UK tax liabilities and must calculate interest and penalties based on the existing legislation.

If the disclosure is correct and complete and full cooperation is given by supplying any further information requested, HMRC will not seek to impose a higher penalty, except in certain circumstances, and disclosure details will not be published. However, if a complete or accurate disclosure is not made or if there is a refusal to send in additional information, HMRC may apply a higher penalty, open a civil or criminal investigation and publish details on the HMRC website. In addition there may also be liability to criminal prosecution.

HMRC will invite the taxpayer to self-assess his behaviour and the number of years of the disclosure. The behaviour self-assessment will form part of the disclosure and HMRC will not guarantee the terms of the facility for inaccurate disclosures. HMRC may conduct a further investigation of an inaccurate disclosure either civilly or as part of a criminal investigation, which is normally reserved for cases where HMRC needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.

HMRC reserves complete discretion to conduct a criminal investigation in any case and to carry out these investigations across a range of offences and in all the areas for which the Commissioners of HMRC have responsibility.

After 30 September 2018, new sanctions under ‘Requirement to Correct’ [see our UK Tax News Item of 30 September 2016] will be introduced that reflect HMRC’s new approach although disclosure may still be made after that date but under terms which will not be as good as those currently available.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

 

 

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