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Lorraine Explains! What is the Worldwide Disclosure Facility (WDF)?
22/09/2021

Lorraine is our Red Shoes Accounting team member who heads up Worldwide Disclosure Facility (WDF) service. So, what is the WDF, how might it affect you and how can we help? 

 

What is the Worldwide Disclosure Facility (WDF)?

The WDF was introduced by HMRC in September 2016 to offer the opportunity to voluntarily disclose any undeclared offshore income or gains. HMRC have continued to receive information relating to offshore income and gains from over 100 countries, under Common Reporting Standard (CRS) agreement, which increased their ability to trace and detect undeclared assets.


HMRC also introduced Requirement to Correct (RTC) rules which required taxpayers with undeclared offshore income and gains to make a disclosure by 30 September 2018. Failure to meet this deadline would be considered as a Failure to Correct (FTC), therefore any disclosure submitted after this date would be subject to tougher penalties with a minimum of 100% and a maximum of 200% of underpaid tax.


Who is eligible?


If you are subject to UK tax and have undeclared offshore income or gains, you can use the WDF to correct your tax position. This could include unpaid tax on the following:


 Income which has been earned from a non-UK territory
 Assets held in offshore territories
 Activities carried out outside the UK


It's advisable to declare any offshore assets before being prompted, as HMRC will offer more favourable terms and lower penalties.

What is the process?

If you want to make an unprompted disclosure or have been prompted by HMRC to do so,
there are several steps to be followed:


 Inform HMRC of your intention to disclose by submitting an initial notification using their Digital Disclosure Service (DDS)
 HMRC will send a letter acknowledging your notification and allow 90 days to finalise and submit the disclosure
 You will need to submit details of underpaid tax, interest and assess the correct level of penalties
 You will be asked to self-assess behaviour that led to the failure to disclose, which will determine the correct level of penalties and  the number of years you need to declare
 To negotiate lower penalties, it's important to offer full co-operation and submit an accurate disclosure

It's advisable to seek advice from professionals with experience, knowledge and detailed understanding of tax rules. With our expertise in WDF disclosures, Red Shoes Accounting have helped a number of clients in making disclosures and we are familiar with the process.

When a declaration is made, payment must also be submitted - although a Time to Pay agreement can be reached if required.

In summary, we can do the following for you:

  • Take ownership of the voluntary disclosure process
  • Advise on the best possible options for voluntary disclosure
  • Communicate with HMRC for you 
  • Agree the amount payable with HMRC including penalties

For further information on our specialist tax investigation services for the Worldwide Disclosure Facility (WDF) please contact our friendly, experienced and knowledgeable team for a confidential discussion.