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Automatic Exchange of Information arrangements between tax authorities are gathering pace and\u00a0 over 100 countries have signed up to a global system which is known as the Common Reporting Standard (CRS).\u00a0 This will come into force over the next two years.\u00a0 Under the CRS tax authorities in the participating countries will automatically exchange information.\u00a0 This exchange of information will give HMRC unprecedented access to information about UK taxpayers who have wealth overseas.\u00a0 The information provided will be more extensive than just the details of interest earned on a foreign bank account.<\/p>\n
HMRC have introduced a new disclosure arrangement, the Worldwide Disclosure Facility (WDF) to give taxpayers a final opportunity to make a voluntary disclosure of offshore income and gains and put their tax affairs in order.\u00a0 This disclosure facility will remain open until 30 September 2018 \u2013 the CRS comes fully into effect in October 2018.<\/p>\n
Previous disclosure arrangements offered some concessions on the penalty provisions to give some incentive for people to make a disclosure.\u00a0 The Liechtenstein Disclosure Facility, which closed on 31 December 2015, was particularly advantageous because disclosures were limited to income and gains arising after 5 April 1999, there was a lower rate of penalty and a prosecution amnesty.\u00a0 The WDF does not offer any concessions.<\/p>\n
The WDF can be used to disclose a UK tax liability relating wholly or partly to an offshore issue.\u00a0 This would include unpaid or omitted tax relating to:<\/p>\n
In order to use the WDF it is necessary to register using the HMRC Digital Disclosure Service.\u00a0 The detailed disclosure has to be made, using a HMRC template, within 90 days.\u00a0 This involves computing the tax due for each year covered by the disclosure, calculating the interest due on the unpaid tax.\u00a0 It is also necessary to calculate the penalties which would be due on the tax.\u00a0 In addition it is necessary to confirm the maximum value of assets held outside the UK at any point over the period of\u00a0 5 years up to the date of the disclosure.<\/p>\n
If the disclosure is correct and complete and full co-operation has been provided in the event that HMRC request further information, then HMRC will not impose a higher penalty.\u00a0 However if the disclosure is incomplete or inaccurate, HMRC may charge a higher penalty.\u00a0 They can also open a civil or criminal investigation and can publish the taxpayer\u2019s details on the HMRC website.\u00a0 Payment of the tax, interest and penalties must be made when the disclosure is submitted.\u00a0 If it is not possible to pay the liability at the time of making the disclosure then HMRC must be contacted before the disclosure is submitted to agree payment arrangements with HMRC.<\/p>\n
Whilst there are no concessions under the WDF, the severe penalties which will be imposed in respect of offshore tax evasion which will take effect under new rules in 2018\u00a0 should serve as an incentive to use this disclosure opportunity.<\/p>\n","protected":false},"excerpt":{"rendered":"
Automatic Exchange of Information arrangements between tax authorities are gathering pace and\u00a0 over 100 countries have signed up to a global system which is known as the Common Reporting Standard (CRS).\u00a0 This will come into force over the next two years.\u00a0 Under the CRS tax authorities in the participating countries will automatically exchange information.\u00a0 This[…] <\/p>\n