On June 15, 2017, U.K. HMRC issued updated guidance on the Worldwide Disclosure Facility (WDF). See BEPS Action 12. On December 31, 2015, all HMRC offshore facilities closed. The WDF is currently available to anyone who would like to disclose a U.K. tax liability that relates wholly or partly to an offshore issue, which includes unpaid or omitted tax relating to any of the following:
- Income arising from a source in a territory outside the U.K.
- Assets situated or held in a territory outside the U.K.
- Activities carried on wholly or mainly in a territory outside the U.K.
- Anything having effect as if it were income, assets or activities of a kind described above.
After September 30, 2018, the U.K. will introduce new sanctions under the Requirement to Correct.
To register for the WDF, the taxpayer must disclose an offshore issue, but should also disclose any onshore issues as well. When starting the disclosure process, the taxpayer will need to calculate what is owed for both offshore and onshore liabilities on an annual basis. The taxpayer must tell HMRC of his intention to make a disclosure, and should do this as soon as you possible after becoming aware of owed taxes on undeclared offshore income or gains. The following customers can make a disclosure:
- Individual regarding tax affairs or company’s tax affairs; this includes director or company secretary.
- Taxpayer with respect to trust or estate.
- Taxpayer with respect to limited liability partnership.
- On behalf of someone else, for example, if you’re a tax adviser, a personal representative, or an executor of an estate.
Once the taxpayer has notified HMRC of his intention to make a disclosure, he will have 90 days to (i) gather the information necessary to fill in the disclosure; (ii) calculate final liabilities including tax, duty, interest and penalties; and (iii) fill in the disclosure, using the unique disclosure reference number (DRN) provided by HMRC after notification.
The taxpayer can make a disclosure for all tax years up to and including 2015 to 2016. But if HMRC sent a tax return for that year or any tax year from 2013 to 2014 which is still outstanding, the taxpayer must complete the return and should not include these tax years on this disclosure form.