Have you received a letter from HMRC inviting you to declare your foreign assets and income to the UK Government? No need to panic. In this article, we provide some clarifications on HMRC’s guidelines for taxpayers wishing to use the Worldwide Disclosure Facility (WDF) to declare offshore wealth.
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General Overview
Many countries have committed to exchanging information on a multilateral basis under the so-called Common Reporting Standard (CRS) developed by the Organisation for Economic Co-operation and Development (OECD).
(The CRS significantly increases international tax transparency and is the new global standard for the automatic exchange of financial information between tax authorities, aimed at detecting and discouraging international tax evasion by individuals who, directly or indirectly, invest abroad.)
On December 31, 2015, HM Revenue and Customs (HMRC) closed all its offshore facilities. Until that date, HMRC offered incentives to encourage individuals to come forward and regularize their tax affairs.
Within this framework, the Worldwide Disclosure Facility (WDF) represents the last opportunity for taxpayers to voluntarily come forward before HMRC initiates assessments based on data obtained through the CRS, which could result in harsher penalties for undeclared offshore assets.
This tax compliance mechanism was established in September 2016.
1.1. Have you received a letter about your money or assets held abroad?
You should use this facility if you have received a letter from HMRC regarding the regularization of your funds or assets held overseas. Likewise, it should be used if, upon reviewing your tax records, you discover an error related to your foreign activities or realize that you have failed to file a required tax return.
As the procedure is complex and nuanced, if you are unsure about the accuracy or completeness of the information you intend to provide, or about any aspect of your disclosure, you should consult a qualified professional.
In many cases, taxpayers may request up to 90 days to complete the disclosure, and in more complex situations, this period may be extended further.
Below are some key points to consider before contacting a Chartered Accountant or Tax Solicitor.
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Who can use the WDF?
Anyone who needs to disclose foreign-held assets (e.g., securities, interest, capital gains, real estate, or rental income) that may give rise to a UK tax liability can use this facility and benefit from reduced penalties.
You may consider using the WDF if you have undeclared offshore activities that could generate unpaid taxes, including:
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income from foreign sources;
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assets located or held outside the UK;
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activities carried out entirely or primarily outside the UK;
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any form of wealth (income or capital) held abroad.
If HMRC discovers that the assets or funds included in your disclosure originate, in whole or in part, from criminal activity, it may refuse your request to regularize through the WDF.
All disclosures, including those involving tax avoidance schemes, will be reviewed by a designated HMRC officer.
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Registration for the WDF
To access the facility, you must notify HMRC.
When notifying HMRC and submitting your disclosure, you will need to provide some basic information, such as:
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your name, date of birth, and address;
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your National Insurance Number;
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your Unique Tax Reference (UTR);
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the name and contact details of any professional representative acting on your behalf.
Once you have notified HMRC of your intention to make a disclosure, you will have 90 days to:
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gather all necessary information to complete your WDF submission;
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calculate your final liabilities, including taxes, interest, and penalties;
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complete your disclosure using the Disclosure Reference Number (DRN) provided by HMRC.
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Conditions and potential liabilities under the WDF
To use the WDF, you must:
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be eligible under HMRC’s guidance;
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fully disclose all previously undeclared matters to the UK tax authorities;
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calculate taxes, interest, and penalties according to current law.
If your disclosure is accurate and complete, and you provide any additional information HMRC requests to verify your statements, the tax authority will generally apply the minimum level of penalties, except in specific circumstances.
However, if you submit incomplete, inaccurate, or partial information—or fail to provide additional details upon request—HMRC may:
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apply higher penalties;
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open a tax assessment and launch a criminal investigation;
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publish your details on its website.
You could also face criminal prosecution for making false or deliberately incomplete statements.