On 5 September 2016 HM Revenue & Customs (“HMRC”) announced the launch of the Worldwide Disclosure Facility (“WDF”) for those with undeclared offshore income or gains.
This ‘last chance’ facility has been long awaited, following the closure of the Liechtenstein Disclosure Facility (LDF) at the end of 2015. It is the final opportunity for those who have avoided a disclosure in the past to come forward and bring their tax affairs up to date.
The WDF does not offer the beneficial terms which made the LDF such an attractive option, with no reduced penalty, no restricted look back period and no guarantee of immunity from prosecution. Why then should it be considered as a means for disclosing?
The answer is simple, in that those who have yet to make a disclosure and decide not to participate in the WDF stand a high chance of finding themselves the subject of an HMRC enquiry, possibly even a criminal investigation. In the very near future, HMRC will be provided with details of UK tax residents holding offshore bank accounts, including names and addresses, the financial institution in question and the balance held. This is thanks to the Common Reporting Standard (“CRS”), providing for the automatic information exchange of bank data and beneficial ownership. Over 100 countries have now adopted the CRS, making the chances of finding a jurisdiction where funds can now remain genuinely anonymous a near impossible task.
Information is already being collated under the CRS and the first exchange should be completed by September 2017. For many, time is very much running out.
While the WDF may not offer the benefits included under the LDF, there are clear advantages to be had from making a voluntary disclosure to HMRC:
- Reduced penalty on the additional tax
- Likelihood of prosecution hugely minimised
- A process driven and managed by those acting on your behalf, not by HMRC
The online process for making a disclosure through the WDF may appear streamlined and straightforward but it should be approached with extreme caution and professional advice should be sought by those considering this route.
The message from HMRC is clear: they intend to tackle offshore evasion with all the tools at their disposal and those with a disclosure to make should come forward now, before HMRC come to them.
For more information on the WDF please contact tax dispute specialist partner Gary Gardner at email@example.com