Worldwide Tax Disclosure Facility
From September 2018, over 100 countries began to exchange information with HMRC under the Common Reporting Standard and provide HMRC with visibility of all overseas income streams of UK taxpayers.
The new common standard affects any UK taxpayer who has offshore income (including income tax, capital gains or inheritance tax) which has not been reported to HMRC in a prior year and would be considered taxable income. Information regarding this income will now, in most cases, be available to HMRC.
The initial Requirement to Correct period under the Worldwide Tax Disclosure Facility ended in September 2018. Any disclosure submitted after 30 September 2018 is now outside of this window and subject to tougher Failure To Correct (FTC) penalties. These have a minimum penalty of 100% and a maximum penalty of 200% of underpaid tax. If you have overseas income that has not been reported to HMRC, it is strongly advised that you make an unprompted disclosure, as HMRC will offer lower penalties and more favourable terms than if an assessment is issued.
How to Correct:
The first step is to make a notification to HMRC using the online Digital Disclosure Service (DDS). Once HMRC responds with an acknowledgement of the notification, a taxpayer will have 90 days to submit the full disclosure, including details of underpaid tax, interest and a self assessment of the penalties that should be charged. The negotiation of penalties is important, as reductions are possible depending on behaviour, severity and the length of time that has passed. Professional assistance is recommended to avoid overpayment.
We have assisted numerous clients with the voluntary disclosure of underpaid tax on overseas income and gains using the current HMRC DDS facility and would be very pleased to provide an initial assessment of your situation and a quote for our assistance, with a recommendation of the appropriate action required.