Offshore Income Disclosure Service

What is offshore income disclosure?

There’s nothing wrong with having investments overseas as long as you declare all taxable income and gains on your UK tax return.

The government is getting tougher in its approach to tackling those who don’t declare the correct amounts of tax due on their offshore income and assets. New international collaboration to share information and laws to tackle non-compliance has started. However, there’s still a chance to bring all your tax affairs up to date if you have worldwide income that’s not been taxed before

How will this help you?

Anyone who wishes to disclose a UK tax liability that relates wholly or in part to an offshore issue is allowed to use the facility under the terms:

• to make a full disclosure of all previously undisclosed UK tax liabilities within 90 days of notifying your intention to disclose
• calculate interest and penalties due based on the existing legislation

In specific circumstances it may not be appropriate to allow full reductions for disclosure. For example, where a person has taken a significant period to correct their non-compliance. If they’ve previously have been able to make their disclosure through one of HMRC’s offshore facilities they can no longer expect HMRC to agree full reduction for disclosure.

In such cases it is unlikely that HMRC would reduce the penalty by more than 10 percentage points above the minimum of the statutory range. For this purpose we would normally consider a ‘significant period’ to be over 3 years or less where the overall disclosure covers a longer period.

The WDF is aligned to this updated treatment and guidance.

What to do next

You can make a disclosure online via the DDS and you’ll need to notify your intention to disclose first.

You only need to tell HMRC that you will be making a disclosure. Once you’ve notified an intention to make a disclosure, you will have 90 days to:

• collate the information needed to complete the disclosure
• calculate the final liabilities including tax, duty, interest and penalties
• complete the disclosure, using the unique disclosure reference number provided when notifying

Why you need to disclose?

If you haven’t declared your income and gains and HMRC finds out later, you’ll face an investigation and will have to pay the undeclared tax with a penalty (of up to double the tax you owe), and could even face prosecution.

Using the WDF to make a full disclosure of all undeclared offshore liabilities may avoid the need for an investigation in the future where you may pay a higher penalty.

Financial institutions are already collecting information on your overseas accounts