If you are a UK resident and have income from investments, properties, companies or trusts overseas, you may be liable for tax here in the UK.
In 2016, HMRC opened Worldwide Disclosure Facility (WDF) service to enable people to disclose their UK tax liability that relates wholly or in part of an offshore issue. HMRC work with over 100 countries exchanging information under the Organisation for Economic Co-operation and Development’s Common Reporting Standard (CRS), increasing international tax transparency.
Who is eligible to use the facility?
If you have (or think you may have) undeclared income from investments, properties, companies or trusts, you will be able to use WDF to declare them. For example, the following could be instances where you would need to declare overseas income via WDF:
- 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 an effect as if it were income, assets or activities of a kind described above
- funds connected to unpaid or omitted UK tax that you have transferred to a territory outside the UK or are owned in a territory outside the UK.
We appreciate the eligibility criteria can be a complex one to navigate for some people given their personal circumstances. So, it is highly recommended that you seek professional advice to clear any doubts and decide a way forward.
Are there any penalties?
The short answer is Yes.
Since Oct 2018 HMRC has taken a toughening approach by investigating every lead form the CRS and introducing new harsher penalties.
The penalty will depend on whether the disclosure is prompted (HMRC contacts you and prompt) or an un-prompted (you voluntarily disclosing).
Needless to say, it’s favourable in terms of penalties for you to voluntarily disclose offshore income as opposed to the other. The table below demonstrates the potential penalties and minimum reduction possible for both scenarios:
- Voluntary Disclosure (No contact from HMRC) – Standard 200% of PLR, Minimum 100% of PLR
- Non-Voluntary/Compulsory Disclosure (after HMRC contact) – Standard 200% of PLR, Minimum 150% of PLR
Source: HMRC Compliance checks series – CC/FS17 (Page 2)
The penalty is based on the potential lost revenue (PLR), meaning the tax due.
The reduction percentage will be depending on the quality and accuracy of the disclosure made. Therefore, it could be really beneficial to seek professional assistance when you deal with disclosures.
How can WIS Accountancy experts help me?
At WIS we have over 40 years of combined experience on dealing with offshore tax matters. We can help you with your worldwide disclosures ensuring quality and accurate information is submitted to the HMRC efficiently with minimum hassle as we have done for many of our clients in the past.
Act now before it costs you too much! Reach out to one of our experts on 02030111898 to start a no-obligation and confidential consultation.