Have you received a letter from HMRC with a CFSS- number?
We are currently hearing from many individuals who have recently received a nudge letter from HMRC regarding compliance with offshore matters, particularly recently in Italy which aim to prompt disclosures.
If you are someone who wants to make an unprompted disclosure or have been prompted by HMRC to do so, there are several steps to be followed.
Worldwide Disclosure Facility WDF
Over 100 countries have committed to exchange information on a multilateral basis under the Organisation for Economic Co-operation and Development’s Common Reporting Standard (CRS). Information from CRS has greatly increased HMRC’s ability to trace and detect undeclared offshore income and gains Parallel the Worldwide Disclosure Facility (WDF) was introduced by HMRC in September 2016. This offered an opportunity to voluntarily disclose undeclared offshore income or gains. On 1 October 2018, new sanctions under Requirement to Correct were introduced to reflect HMRC’s toughening approach. Requirement to Correct (RTC) rules 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). Accordingly, any disclosure submitted after 30 September 2018 would be subject to tougher Failure To Correct (FTC) penalties with a minimum penalty of 100% and a maximum penalty of 200% of underpaid tax.
CescaUK ’s Disclosure team is a group of qualified and regulated UK & EU tax professionals specialising in tax investigations and voluntary disclosure work. We offer a bespoke service with discreet and confidential small teams to run your case. Specialist advisers with years of experience!
We represent taxpayers with HMRC through the process, often working alongside your regular accountant or other professionals such as lawyers, trustees or executors. There are lots of ways we support and guide taxpayers to settlement of the process.
Our team includes Italian certified accountants able to read Unico Assessment and 730 Assessment in the correct way or to contact your bank or third parties and explain in Italian the matter. Our specialist in WDF disclosures has helped a large number of clients in making disclosures through WDF All disclosures submitted by our firm have been accepted by HMRC and we have used our knowledge and expertise to minimise overall liabilities for our clients
Who is Eligible?
If you are subject to UK tax and have undeclared offshore income or gains, you can use the Worldwide Disclosure Facility (WDF) to correct your tax position. It is advisable to disclose before being prompted as HMRC will offer more favourable terms and lower penalties for an unprompted disclosure.
HMRC’s Digital Disclosure Service allows people to bring their affairs up to date where mistakes have been made or things have been missed in the past.
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
How we can help
To negotiate lower penalties, it is important to offer full co-operation and submit an accurate disclosure. Failure to do so can have serious consequences such as higher penalties, criminal investigation or even worse, your name being published online.
1 Failure to correct penalties. it is important to offer full co-operation and submit an accurate disclosure. Failure to do so can have serious consequences such as higher penalties Generally HMRC is looking to charge a 200% penalty in WDF cases. We can help make representations where the facts support the case that the penalties should be lower. Cooperation and full disclosure with HMRC through a professional adviser will also help to reduce penalties.
2 No immunity from prosecution. In the small print of the WDF it does make the point that the process provides no immunity from criminal prosecution. Failure to cooperate and submit an accurate disclosure can have serious consequences such as higher penalties, criminal investigation or even worse, your name being published online. Tax evasion is a criminal offence. As such a professional adviser who regularly deals with voluntary disclosures to HMRC can help assess the risks in each specific case and ensure the most appropriate disclosure process is used to safeguard you
3 Time limits and behaviours – do you need to go back 20 years? The UK tax legislation includes three main categories of behaviours: innocent, careless (similar to negligence) and deliberate (similar to fraud) behaviour. These behaviours are linked to the three main time limitations to charge back taxes, either four, six or twenty years respectively. Time limits were then extended and changed for offshore related matters, including a new twelve year rule in certain offshore cases. This is a particularly complex area and certainly requires a Cescauk expert to understand and apply the relevant time limit. It clearly also make a massive difference to amount of tax, late payment interest and penalties charged in WDF case.
4 Tax treaties & Foreign Tax Credits. The good news is if you have paid tax in a country outside the UK you may well be entitled to a credit to reduce any further UK tax liabilities through the Worldwide Disclosure Facility. This will require an analysis of tax treaty arrangements between the countries and calculation of Foreign Tax Credits. We have experience in this work, Our team includes Italian certified accountants able to read Unico Assessment and 730 in the correct way or to contact your bank or third parties and explain in Italian the matter to get the right answer
5 Reporting foreign investments in the UK. The fact is this is horribly complex and does require expert analysis. In italy for instance, Savings and Dividends are not declared in Unico and banks are not used information needed to assess in the UK. Even calculating rental income and expenditure accounts using UK rules can produce a different answer compared to the country of origin. Currency exchanges, UK tax year reporting to 5 April, the situs of assets and different rules for income and capital gains all add to the complexity. We are familiar with the different types of investment vehicles such as life insurance bonds, trusts, pension funds, tax-free wrappers, and foundations in terms of the UK tax implications, and the correct reporting for WDF purposes. Rules will also be different if you are a non-UK domiciled individual on the remittance basis of taxation or have periods of non-UK tax residency.
We are currently hearing from many individuals who have recently received a nudge letter from HMRC regarding compliance with offshore matters, particularly recently in France, India, Italy, Spain and Portugal) which aim to prompt disclosures. . Where we need to contact tax professionals in other countries our Italian certified accountant can liaise speaking in the same language no misinterpretation, full knowledge of the matter and again offer a discrete service. This is part of Cescauk international private client global network
You should therefore seek advice from professionals with experience, knowledge and detailed understanding of tax rules.
In summary we will do the following:
- Take ownership of the voluntary disclosure process
- Advise clients on best possible options for voluntary disclosure
- Communicate with client’s accountants (if needed)
- Communicate with HMRC
- File the disclosure report
- Agree the amount payable with HMRC including penalties
For further information on our specialist tax investigation services for the Worldwide Disclosure Facility, please contact our friendly, experienced and knowledgeable team for a confidential discussion at email@example.com