HMRC is to set up a Worldwide Disclosure Facility to allow taxpayers with offshore non-disclosed accounts to legitimise their tax arrangements, although details about the actual restrictions and penalties are not clear, nor a closing date for the amnesty period
Effective from 5 September, the Worldwide Disclosure Facility replaces previous country-specific amnesties and settlement agreements such as the Swiss UK tax agreement and Liechtenstein Disclosure Facility (LDF) and is designed to allow those with outstanding tax to pay, related to offshore investments and accounts, to put their affairs in order.
However, unlike earlier schemes there will be no special terms or lower fines to compensate for disclosure.
The current announcement provides the later start date for the new WDF, in under two weeks, but no other details.
An HMRC spokesperson told Accountancy: ‘There is no end date for the worldwide disclosure facility as but it was first announced in the first Budget in 2015. There is no specific end date but more information will follow.’’
Unlike the LDF and other disclosure schemes, HMRC’s preliminary announcement suggests there will not be favourable terms available for settlement.
The LDF agreement took effect in 2009 but was revised from its original concept, but originally offered taxpayers the opportunity to pay a penalty of 10% of the tax due, plus immunity from prosecution, less than was the likely charge under other arrangements.
This led some taxpayers who needed to resolve their tax irregularities but did not have overseas assets to opt to use the scheme. However, HMRC has said that the new WDF will form part of an ‘extensive package of measures represents a significant toughening of the government’s approach to tackling offshore tax evasion and its enablers’.
The first mention of a worldwide disclosure facility was made at Budget 2015, when the Treasury indicated that the two main existing disclosure facilities were to close early ‘in advance of a new disclosure opportunity’, which it said at the time would be available from 1 January 2016. The new scheme is now set to come into force from 5 September.
The Liechtenstein Disclosure Facility closed early at the end of 2015, rather than the scheduled date of April 2016, while the Crown Dependencies Disclosure Facilities have also been closed, although they were originally scheduled to run until September 2016.
There will be no consultation on the new disclosure facility although the announcement coincides with the launch of a consultation on offshore tax evasion, introducing a requirement to correct.
The introduction of increased data sharing between the UK tax authority from October 2016, from the crown dependencies and overseas territories, with more data expected the following year once the Common Reporting Standard (CRS) comes into force.
Mike Down, head of tax investigations at RSM said: 'The announcement from HMRC gives us scant detail on the new worldwide disclosure facility [WDF] for those wanting to come forward and pay outstanding taxes from offshore investments and accounts.
‘However, we now know that there will be “no special terms” which presumably means that although there will be a streamlined process for making reports to HMRC, the tax interest and penalties will be payable in full.
‘There is also no mention of immunity from prosecution, which was available in the now closed LDF. This confirms that such immunity is no longer an acceptable option.’
This is a tough new stance on the part of HMRC and the UK authorities. Jennie Granger, director general of enforcement and compliance for HMRC, said: ‘We are determinedly tackling this. We will find those who think they can dodge paying tax in this country. We’ve closed old disclosure facilities, increased penalties, and ramped up our powers to tackle evaders and those that help others evade - the days of any safe havens for tax evaders are numbered.’