HMRC Worldwide Disclosure Facility
Disclosure of any arrangement that may, directly or indirectly, reduce the tax payable to HMRC is essential to avoid the potential consequences of HMRC finding out for themselves. Disclosure facilities, such as DOTAs are designed to encourage their use, with the benefits that come from be publicly compliant and, essentially, “coming clean”.
Alternatively, disclosure is an excellent method to seek validation of a scheme, rather than entering into it with the hope that it is legitimate.
Worldwide Disclosure Facility
On 5 September 2016, HMRC announced the launch of a Worldwide Disclosure facility.
This is not intended to be a descendant of the Liechtenstein Disclosure Facility (LDF), which closed in December 2015, but is an opportunity for taxpayers to regularise their tax affairs in advance of the Common Reporting Standard (CRS) which is effective from 30 September 2018.
As a result of the intended commencement of the CRS, there is obviously a great incentive for you to consider disclosure of your tax arrangements worldwide to be made, as the benefits (described below) of disclosure will not be available if HMRC later initiate investigations as a result of information disclosed by other countries under the CRS.
The Common Reporting Standard
The Common Reporting Standard (CRS) is a standard for the automatic exchange of tax and financial information on individuals and businesses worldwide, which was originally developed by the Organisation for Economic Co-operation and Development in 2014.
The CRS in an International initiative whereby over 100 countries have undertaken to exchange Tax payer information on a multilateral basis, with the intention of mitigating cross-border tax fraud.
Who does this apply to?
Any UK or non-resident individual or organisation that has a UK Tax liability originating from overseas or the UK, but was then subsequently moved abroad.
What Taxes does this relates to?
All direct Taxes (including Inheritance Tax) going back 20 years.
VAT is not included in the facility.
What are the benefits of using this facility?
Disclosure under the Worldwide Disclosure Facility is considered voluntary and therefore the penalties are lower than those applied as a result of an HMRC enquiry.
In addition, HMRC tend not to pursue criminal prosecutions where a voluntary disclosure is made, although there is no guarantee on this.
In addition to this, information exchanged under the terms of the CRS commenced from May 2017 and Tax payers who have not made a disclosure by September 2018, but HMRC are in receipt of overseas information in connection with their tax affairs, can expect to be vigorously pursued.
What are the consequences of non-disclosure?
Non-disclosure prior to 30 September 2018 may mean significantly higher penalties or potentially a criminal prosecution.
How do I make a disclosure?
Taxpayers must register through the online portal for this facility, however it is important that individual circumstances are reviewed and considered prior to registering, particularly where there are also onshore/other complex Tax issues.
At Francis Wilks & Jones we can assist with all such tax disclosure issues and what you need to consider before making any such disclosure.
Please call any member of our Tax Disputes Team for your consultation now on 0207 841 0390. Alternatively email us with your query at email@example.com and we will call you back at a time convenient for you.