Dealing with offshore income or assets you have not previously disclosed can feel overwhelming. The HMRC Worldwide Disclosure Facility offers a chance to come forward and put things right. Our experienced tax lawyers can guide you through the process.
What is the HMRC Worldwide Disclosure Facility?
The HMRC Worldwide Disclosure Facility (WDF) allows individuals and businesses to voluntarily disclose unpaid UK tax relating to offshore income, gains or assets. It provides a structured way to correct past tax issues and can reduce penalties if you act before HMRC opens its own investigation.
If you are worried about historic offshore income or assets, early disclosure is often the safest and most cost-effective way to bring your tax affairs up to date.
Speak with our tax dispute team today for confidential advice. We have been advising individuals and business for 25 years
At a glance
- The WDF is HMRC’s main route for disclosing offshore tax issues.
- It applies to Income Tax, Capital Gains Tax and Inheritance Tax, going back up to 20 years.
- Acting voluntarily usually leads to lower penalties and reduces the risk of further HMRC action.
How does the Worldwide Disclosure Facility work?
The Worldwide Disclosure Facility is HMRC’s disclosure route for anyone with unpaid UK tax involving offshore matters. “Offshore” includes non-UK income or assets, UK assets held through overseas structures, or funds that have been moved abroad.
- The WDF was created ahead of the Common Reporting Standard (CRS), which now enables more than 100 countries to share financial information with HMRC. As a result, it is far harder for historic offshore irregularities to go unnoticed.
- A voluntary disclosure through the WDF is made using HMRC’s Digital Disclosure Service. Once HMRC accepts your registration, you must provide a full and accurate calculation of the tax owed, interest and penalties.
https://www.franciswilksandjones.co.uk/smes-directors-shareholders/tax-disputes/FWJ Takeaway: The WDF exists to help taxpayers correct mistakes before HMRC intervenes. Acting early normally leads to a better outcome. Our tax dispute team can guide you through the entire HMRC disclosure process.
Who needs to make a disclosure through the WDF?
The WDF applies to anyone – UK resident or non-resident – with a UK tax liability connected to offshore income, assets or gains. Common situations include:
- income from overseas employment, property or investments
- assets or bank accounts held offshore
- distributions from offshore trusts or companies
- UK assets transferred overseas, or funds moved through several jurisdictions
- historical errors or omissions identified during personal or corporate tax reviews
Many disclosure cases arise when CRS information is shared with HMRC, or where accountants identify issues when preparing later-year returns.
The WDF can be used by individuals, companies, trustees and executors.
FWJ Takeaway: If offshore income or assets may create a UK tax liability, the WDF is usually the correct route to regularise your position.
What taxes and issues can be disclosed under the WDF?
The WDF covers all direct taxes that may arise from offshore matters, including:
- Income Tax
- Capital Gains Tax
- Inheritance Tax
HMRC can look back up to 20 years in cases involving offshore tax issues. This longer period reflects the increased expectation that taxpayers fully account for foreign income.
The WDF does not cover VAT, duties or excise matters. Those issues are dealt with through other HMRC processes.
Some disclosures may overlap with wider tax investigations. For example:
- Where HMRC suspects a deliberate inaccuracy, they may issue a Code of Practice 9 / COP9 invitation.
- Where HMRC questions the technical basis of a tax arrangement, they may operate under Code of Practice 8 investigation.
FWJ Takeaway: The WDF covers most offshore-related Income Tax, CGT and IHT issues. Other HMRC codes may apply if HMRC already has concerns.
How do you make a disclosure to HMRC?
HMRC expects WDF disclosures to follow a clear process. Acting carefully is important, as errors can lead to higher penalties or further enquiries.
1. Register your intention to disclose
You submit an initial notification via HMRC’s Digital Disclosure Service. HMRC then provides a reference for your disclosure.
2. Gather your financial information
This usually includes foreign bank statements, investment records, property documents and historic tax returns. Accuracy is essential.
3. Prepare an outline of the issue
This explains what went wrong, when it occurred and why the tax was not correctly reported.
4. Calculate the tax, interest and penalties
Calculations must follow UK tax law, including the extended 20-year assessment period for offshore matters. Interest is applied under the Taxes Management Act 1970.
5. Submit the full disclosure
Your final disclosure includes a statement of the tax owed and a signed declaration confirming its accuracy.
6. Pay the liability
HMRC may agree staged payment terms in some circumstances.
7. HMRC reviews and finalises the disclosure
If HMRC accepts the disclosure, the matter is normally closed unless new information emerges.
FWJ Takeaway: The WDF process is structured but requires careful preparation. A clear, accurate disclosure helps avoid unnecessary questions or delay. Our tax disclosure team can help guide you through this process.
What are the risks of not disclosing offshore income to HMRC?
The consequences of non-disclosure can be significant.
Under the Finance Act 2017, HMRC can issue higher penalties for offshore tax non-compliance, particularly where the failure is deliberate. Since the introduction of CRS, HMRC receives financial information from hundreds of jurisdictions, making detection far more likely.
Civil penalties can include:
- higher “offshore” penalty rates
- penalties for failure to notify
- asset-based penalties in the most serious cases
- interest on late-paid tax
- naming on HMRC’s deliberate defaulters list, in some circumstances
Although the WDF is a civil process, failure to disclose when prompted may increase the likelihood of HMRC opening a formal investigation.
FWJ Takeaway: Non-disclosure carries increasing risk. Voluntary action usually leads to lower penalties and reduces the chance of further HMRC enquiries.
Frequently asked questions
How far back can HMRC investigate offshore tax?
HMRC can assess up to 20 years of unpaid tax where offshore matters are involved. This extended period reflects the expectation that taxpayers fully disclose foreign income and gains.
Lasting point: If historic issues exist, addressing them early helps limit interest and penalty exposure.
Can HMRC see my foreign bank accounts under the CRS?
Yes. More than 100 countries share financial information with HMRC under the Common Reporting Standard. This includes account balances, interest and investment income.
Lasting point: CRS transparency means that offshore income is now far more visible to HMRC.
What penalties apply for undeclared offshore income?
Penalties depend on the behaviour involved and how the issue is corrected. Deliberate or concealed errors attract higher rates under the Finance Act 2017.
Lasting point: Voluntary disclosure through the WDF typically leads to lower penalties than if HMRC opens an investigation first.
Is the Worldwide Disclosure Facility the same as COP9?
No. The WDF is for voluntary disclosure of offshore matters. COP9 is used where HMRC believes there may be deliberate behaviour requiring a Contractual Disclosure Facility.
If you are unsure which route applies, specialist advice can help determine the safest option.
Do I need a lawyer to make a disclosure to HMRC?
You don’t have to use a lawyer, but it can save you an enormous amount of time, stress and money to have proper expert advice. Otherwise you could face severe penalties. .
Lasting point: Errors made during a disclosure can delay settlement or lead to further enquiries. Getting it right first time matters.
Speak to our tax specialists
If you are concerned about offshore income or assets, our experienced tax lawyers can guide you through the disclosure process and help secure the best possible outcome.
Contact us today for confidential advice. Andy Lynch is our head of tax and he spent 18 years at the HMRC Special Investigations team before joining FWJ. He is a country leading expert in tax defence work.
