HMRC may afford Worldwide Disclosure Facility users an additional 90 days

Financial district
James Kennedy BDO By James Kennedy CA, Tax Manager at BDO LLP

28 June 2017

HMRC has updated their guidance regarding the Worldwide Disclosure Facility (WDF):

“… if your affairs are particularly complex, you can apply for up to 90 additional days … to make your disclosure.”

The WDF is available to disclose a UK tax liability that relates at least in part to an offshore issue. It is important that those using the WDF are aware of this change.

They may be allowed an additional 90 days to make their disclosure in the event that their tax affairs are “particularly complex”. This condition is open to interpretation. HMRC therefore suggest contacting them to determine whether the extension applies.

We welcome this change from HMRC. It is of paramount importance that disclosures are accurate and this additional time provides a more realistic timetable.

Requirement To Correct

WDF users must remember that the deadline to make disclosures in respect of the Requirement To Correct remains 30 September 2018. New sanctions under the legislation will apply after this date.

Although the Requirement To Correct will no longer feature in Finance Act 2017, this timetable will most likely remain unchanged. Anyone with concerns should contact a specialist tax adviser as soon as possible. It is vital for advisors to review all overseas interests as a matter of urgency. The deadline for disclosure is approaching.

If someone fails to correct an issue by 30 September 2018, new penalties may apply. Penalties may apply regardless of whether or not the taxpayer is UK resident or UK domiciled. The only defence against such penalties will be that the taxpayer had a ‘‘reasonable excuse’’. These potential penalties comprise:

  • up to 200% tax geared penalty (100% minimum);
  • in the event of any attempt to move assets to a more opaque (i.e., non-CRS) jurisdiction this penalty band rises to 150 – 300%;
  • an additional potential penalty of 10% applied to the value of the offshore assets;
  • potential ‘‘naming and shaming’’.

It is therefore essential to take advice now to avoid this potentially large penalty exposure.

HMRC campaigns

HMRC currently has a number of key campaigns to encourage disclosure of unpaid taxes. The most notable one is the Let Property Campaign. Landlords may use this to disclose unpaid Income Tax accrued via the letting out of residential property. This applies to worldwide residential property. Other campaigns include; Second Incomes Campaign, Card Transaction Programme and the General voluntary disclosure opportunity.

Topics

  • Tax

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