Launched on 5th September 2016, Worldwide Disclosure Facility (WDF) relates to offshore interests. This is interlinked with the Common Reporting Standard (CRS) which automatically gives bank information and registers of beneficial ownership around the world.
Through WDF, HMRC will now have full ammunition in investigating those individuals who don’t use voluntary disclosure opportunity. This will see closure of all available closure opportunities such as Liechtenstein Disclosure Facility (LDF).
With up to 300% maximum penalty for defaulters, WDF is considered as the last chance before tough penalties and sanctions are applied. This sanctions include criminal investigation , naming and shaming.’
Who can use WDF?
WDF is available for anyone who is willing to disclose a UK tax liability relating to offshore issues. These includes:
· All income obtain from a business or asset outside the UK boundaries.
· All activities carried outside the UK territory.
· Assets outside the UK boundary
· Anything with the same effect as income, activities or assets as described above.
· Funds connected to unpaid UK tax not included in the above but has been transferred outside the UK boundaries.
The facility does not only apply to UK residents. Anybody who is not in UK is able to make disclosure if they are eligible to the above criteria.
One is required to notify HMRC using its Digital Disclosure Service with the following information.
· Date of birth
· Unique Tax Reference
· National Insurance Number and
· Details of references
· It is advisable to give extra information as HMRC uses it to check for accuracy.
After disclosing the above details, one is given 90 days to:
· Get all required information needed in filling the disclosure.
· Calculate tax, duty, penalties and interest liabilities
· Use the Unique reference number obtained after notifying them to fill in the disclosure.
Terms and conditions for WDF
The terms for WDF include
· Be eligible.
· Be able to make full disclosure of all previously undisclosed tax liabilities.
· Be able to calculate interest and penalties based on the applicable law.
If one fails to make an accurate or complete disclosure or decides not to send additional required information, HMRC is allowed to:
· Open an investigation and file a case in a court of law and open a criminal prosecution.
· Publish your details in their website.
· Apply a much higher penalty than it could be the case if the disclosure was voluntary.
Terms and facility limits
This facility is only applicable for issues on assets, activities and income outside the United Kingdom territory. One is able to fill disclosure for onshore liabilities with a much lower penalty.
The facility is also limited to liabilities of a period of not more than one year before filling the disclosure.
How to notify HMRC
As soon as you are aware of the disclosure facility, notify HMRC that you intend to make disclosure. This is done through their Digital Disclosure Service on their website.
After that, HRRC will notify you through an email your unique DRN that use will use for the disclosure process and a payment reference number (PRN) that you will use to make payments.
Completing the Disclosure
After notifying HMRC your intention to make disclosure, you will be given 90 days to make your offshore liability disclosure. You will be provided with details on how and when to make payments.
If you are not able to make the required payments, you will be required to sign a payment agreement and submitting it to HMRC before making disclosure.
You will be require to fill the HMRC disclosure service form available at the HMRC website.
After calculating you offshore liabilities depending on the disclosure categories, the penalty will be applicable depending on:
· Inaccuracy in returns and document factsheet.
· Failure to notify.
Higher penalties will be applicable under the following conditions:
· Whether you are under investigation by HMRC.
· You are not following the current laws on penalty calculation.
· Your disclosure is connected on a previous inaccurate disclosure.
WDF is not only targeting notorious tax evaders. The facility apply to anybody, unknowingly or through ignorance. It is therefore advisable to keep up with the latest HMRC development and make timely and faithful offshore liabilities disclosure. You can contact them to discuss specific circumstances and disclosure requirements.