If you have undeclared taxable income or capital gains overseas, the likelihood is that HMRC will be told about your offshore accounts under one or more of the numerous international agreements that HMRC have entered into with their foreign counterparts. If you have not informed HMRC before they discover the position, then you will be put under tax investigation and charged penalties of up to double the tax payable, plus interest, or even prosecuted.
Using the Worldwide Disclosure Facility or WDF to disclose your undeclared income or gains will enable you to reach a settlement with HMRC on more favourable terms than if HMRC later discover what has happened.
You can register with HMRC for the disclosure facility using the Digital Disclosure Service or DDS. Once you register, you are given 90 days to complete your disclosure, including a computation of the tax owed, plus interest and penalties.
You must make a full and complete disclosure and supply any further information requested by HMRC if you wish to avoid higher penalties, a civil or criminal investigation or having your details published as a tax defaulter.
Given that the possibility of higher penalties or a criminal investigation is ever-present, you should take independent legal advice when registering under the DDS and in compiling your detailed disclosure to ensure as favourable an outcome as possible. This is especially the case if you are already under investigation by HMRC, or you have previously made an inaccurate disclosure or settlement with HMRC because higher penalties or a prosecution will be more likely.
If you have undeclared UK income or gains, you can also use the DDS to make a voluntary disclosure about income tax, capital gains tax, national insurance or corporation tax. Again, it is sensible to obtain independent legal advice when doing this so as to reduce the potential penalties and the possibility of a civil or criminal tax investigation.
If you would like to discuss making a disclosure with Patrick Cannon and how he can help you to do so, please contact him here for an initial discussion.