What Is IR35? IR35 is a set of UK tax rules designed to ensure that individuals...
You may need to make a worldwide disclosure if you have investments overseas.
Worldwide disclosure is a facility put in place by HMRC which allows you to bring all your tax affairs up to date. According to the official documentation:
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.
HMRC is keen to stress that this is a compliance issue rather than a criminal matter:
There’s nothing wrong with having investments overseas as long as you declare all taxable income and gains on your UK tax return.
In today's article, we'll take you through everything you need to know about making the disclosure. If you're still unsure, you may prefer to work with a qualified tax expert.
Am I Allowed To Have Investments Overseas?
As the previous quote shows, there's no problem if you want to have an overseas investment. However, countries are sharing more and more information about financial matters. So it's important that income or investments are declared.
Also, there has been a renewed focus on making sure foreign income and assets are taxed properly. Something called the Requirement to Correct:
... creates an obligation for anyone who has undeclared UK tax liabilities that involve offshore matters or transfers to disclose the relevant information about this non-compliance to HMRC.
HMRC recommends working with a tax advisor if you're not sure of your status: "If you need help to decide whether you’ve paid the right amount of tax, ask your tax adviser".
What Is A Worldwide Disclosure?
The Worldwide Disclosure Facility (WDF) is a way for you to get all your overseas tax affairs declared and up to date. It can cover:
- Income arising from a source in a territory outside the UK
- Assets situated or held in a territory outside the UK
- Activities carried on wholly or mainly in a territory outside the UK
- Anything having effect as if it were income, assets or activities of a kind described above
If you decide to make a disclosure, you must make sure you are completely honest and thorough. You also need to calculate the tax, interest and penalties correctly.
As long as you comply fully with the process, HMRC will not:
- Seek to impose a higher penalty
- Publish your details
- Start a criminal investigation
How Do I Make A Disclosure?
If you decide that you want to make a disclosure, the first step is to let HMRC know your intentions. You can do this via the Digital Disclosure Service (DDS).
At this point, you'll have 90 days to prepare the information, calculate the liability and complete the disclosure. The following types of tax-payer can make a disclosure (or have one made on their behalf):
- Individuals
- Companies (by a Director or Company Secretary)
- A trust or an estate
- An agent (on behalf of a client)
- An executor (on behalf of someone who has died)
HMRC is very keen to stress the importance of making an accurate, honest and thorough disclosure:
If you’re unsure which behaviour option applies to you, you must seek professional advice. The self-assessment of behaviour is an integral part of your disclosure and an incomplete or incorrect self-assessment may lead to a civil intervention or criminal prosecution.
Key Takeaways
- If you have overseas tax liabilities you must tell HMRC about them
- You do this by informing HMRC of your intention to disclose, and then completing a WDF form
- If in doubt, get professional tax advice, as the consequences for mistakes can be severe
If you're concerned that you might need to make a worldwide disclosure, please get in touch and one of our experts will be able to start advising you straight away.
