As indicated last month, HMRC opened its worldwide disclosure facility (WDF) on 5 September. The WDF provides an opportunity to declare offshore income and assets before the UK begins full automatic exchange of information with more than 100 other jurisdictions under the common reporting standard in 2018. Before then, from the end of September 2016, HMRC will start to receive financial account information automatically under agreements with the UK’s Crown Dependencies and overseas territories.
The WDF forms part of HMRC’s new online digital disclosure service, which will allow individuals and businesses to make voluntary disclosures relating to income tax, CGT, NICs and corporation tax, including disclosures under the current campaigns targeting undeclared income from residential property lettings, second incomes and credit card sales.
HMRC has published guidance for taxpayers wishing to use the WDF. Eligible taxpayers, including those not resident in the UK, must have a UK liability to declare in connection with an ‘offshore issue’, which will include:
· 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, including funds connected to unpaid or omitted UK tax that are transferred to, or owned in, a territory outside the UK.
Taxpayers should first notify HMRC via the digital disclosure service of their intention to make a disclosure under the WDF. They will need to give their name, address, NINO, unique tax reference, date of birth, and agent details. Full disclosure must then be made within 90 days using the unique disclosure reference number HMRC will supply. This disclosure must include all previously undisclosed UK tax liabilities and a calculation of the final liabilities including tax, duty, interest and penalties based on existing legislation. The disclosure will also include a self-assessment of a taxpayer’s ‘behaviour’ in relation to their tax affairs, ranging from ‘careless’ to ‘deliberate and concealed’ inaccuracies. The options will include declarations that you have:
· failed to notify HMRC about a tax liability but this was not deliberate and you have a reasonable excuse;
· submitted an inaccurate return despite taking reasonable care;
· not filed a return but have a reasonable excuse;
· submitted an inaccurate return because you didn’t take enough care;
· failed to notify HMRC of a tax liability but this wasn’t deliberate and you don’t have a reasonable excuse;
· deliberately failed to notify HMRC of a tax liability;
· deliberately submitted an inaccurate tax return or deliberately withheld information by failing to submit a return.
Based on the options selected, the system will indicate the years to which the disclosure relates. A disclosure under the WDF can be made for all tax years up to and including 2014/15, unless a tax return is still outstanding for any tax year from 2012/13, in which case the return must be completed instead of the WDF disclosure. HMRC has updated its guidance on the interpretation of behaviours for cases involving complex offshore matters in the compliance handbook and enquiry manual.
An integral part of the disclosure will concern any reductions made for matters including residence/domicile, remittance basis, trusts/IHT, transfer of assets legislation, settlements legislation, or offshore corporate structures. Pre-disclosure advice may be sought on complex issues using HMRC’s non-statutory clearance process, in which case the 90-day period for full disclosure will run from the time that the application is finalised.
A disclosure cannot include details for more than one person or company. A husband and wife would have to complete separate disclosures, as would a company and a director of that company.
HMRC will issue an acknowledgement within 15 days of receiving the completed disclosure and will aim to give a decision on the intended course of action within 40 days of the acknowledgement.
As indicated last month, HMRC opened its worldwide disclosure facility (WDF) on 5 September. The WDF provides an opportunity to declare offshore income and assets before the UK begins full automatic exchange of information with more than 100 other jurisdictions under the common reporting standard in 2018. Before then, from the end of September 2016, HMRC will start to receive financial account information automatically under agreements with the UK’s Crown Dependencies and overseas territories.
The WDF forms part of HMRC’s new online digital disclosure service, which will allow individuals and businesses to make voluntary disclosures relating to income tax, CGT, NICs and corporation tax, including disclosures under the current campaigns targeting undeclared income from residential property lettings, second incomes and credit card sales.
HMRC has published guidance for taxpayers wishing to use the WDF. Eligible taxpayers, including those not resident in the UK, must have a UK liability to declare in connection with an ‘offshore issue’, which will include:
· 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, including funds connected to unpaid or omitted UK tax that are transferred to, or owned in, a territory outside the UK.
Taxpayers should first notify HMRC via the digital disclosure service of their intention to make a disclosure under the WDF. They will need to give their name, address, NINO, unique tax reference, date of birth, and agent details. Full disclosure must then be made within 90 days using the unique disclosure reference number HMRC will supply. This disclosure must include all previously undisclosed UK tax liabilities and a calculation of the final liabilities including tax, duty, interest and penalties based on existing legislation. The disclosure will also include a self-assessment of a taxpayer’s ‘behaviour’ in relation to their tax affairs, ranging from ‘careless’ to ‘deliberate and concealed’ inaccuracies. The options will include declarations that you have:
· failed to notify HMRC about a tax liability but this was not deliberate and you have a reasonable excuse;
· submitted an inaccurate return despite taking reasonable care;
· not filed a return but have a reasonable excuse;
· submitted an inaccurate return because you didn’t take enough care;
· failed to notify HMRC of a tax liability but this wasn’t deliberate and you don’t have a reasonable excuse;
· deliberately failed to notify HMRC of a tax liability;
· deliberately submitted an inaccurate tax return or deliberately withheld information by failing to submit a return.
Based on the options selected, the system will indicate the years to which the disclosure relates. A disclosure under the WDF can be made for all tax years up to and including 2014/15, unless a tax return is still outstanding for any tax year from 2012/13, in which case the return must be completed instead of the WDF disclosure. HMRC has updated its guidance on the interpretation of behaviours for cases involving complex offshore matters in the compliance handbook and enquiry manual.
An integral part of the disclosure will concern any reductions made for matters including residence/domicile, remittance basis, trusts/IHT, transfer of assets legislation, settlements legislation, or offshore corporate structures. Pre-disclosure advice may be sought on complex issues using HMRC’s non-statutory clearance process, in which case the 90-day period for full disclosure will run from the time that the application is finalised.
A disclosure cannot include details for more than one person or company. A husband and wife would have to complete separate disclosures, as would a company and a director of that company.
HMRC will issue an acknowledgement within 15 days of receiving the completed disclosure and will aim to give a decision on the intended course of action within 40 days of the acknowledgement.
