Get Compliant with HMRC Voluntary Disclosure

The Worldwide Disclosure Facility (WDF) is HMRC’s current scheme for taxpayers to come forward about unreported offshore tax liabilities. Launched on 5 September 2016, WDF is designed for taxpayers who want to disclose UK tax liabilities that wholly or partly relate to offshore income or assets.
WDF continues the work of previous disclosure schemes, but WDF is a change in HMRC’s approach, with some notable differences.

Territorial Scope

WDF is a catch-all scheme and widens the scope to offshore tax liabilities from all countries. This is in contrast to previous disclosure schemes which focused on specific countries.

Penalties and self-assessment

To encourage uptake, previous disclosure schemes typically offered a reduction in penalties. WDF does not offer a penalty reduction but does allow taxpayers to self-assess the amount of penalty. The self-assessment method fell within the usual HMRC penalty model up until 30 September 2018.

Reporting timeframe

WDF requires registration with HMRC, and full disclosure must be made within 90 days of registration.

Assessment according to (good) behavior

WDF follows HMRC’s behavior-based approach to determine how far back the disclosure should be:

• 4 tax years if you took reasonable care
• 6 tax years if you failed to take reasonable care
• 20 tax years if you deliberately failed to report

The behavior is also self-assessed and, in case of challenge by HMRC, we strongly suggest seeking professional advice with this area.

Requirement to correct

Up until 30 September 2018, WDF worked alongside HMRC’s Requirement to Correct (RTC) regime, whereby correcting the UK position by this date would result in normal penalty rules being applied (as per HMRC factsheets, guidance etc.)  From 1st October 2018 onwards, taxpayers should consider whether the Failure to Correct (FTC) penalty is applicable in their situation. The FTC penalty regime can apply up to a 200% penalty based on the tax due. (For a more in-depth discussion of RTC, please visit our blog.)

UK withholding tax and liabilities

If you think you have undisclosed UK tax liabilities, please speak to a US Tax & Financial Services professional and they will arrange a time to discuss the matter fully.

For a confidential discussion about your options, please email or call us.