If you think you need to disclose an overseas tax issue to HMRC, you’ll need to go through HMRC’s Worldwide Disclosure Facility (WDF). It is for all tax disclosures involving offshore income or gains. 

There are also other matters that need to be considered when dealing with tax non-compliance involving offshore tax matters.

Certificates of tax position 

Each year, HMRC receives vast amounts of financial information on UK taxpayers from overseas jurisdictions through Common Reporting Standard reports . HMRC uses this information to identify taxpayers who have overseas investments, and it asks them to complete a certificate of tax position. You may receive a letter if this applies to you.

HMRC’s wording implies that completing the certificate is mandatory, but there is no legal obligation for taxpayers to do so. In many cases, this may not be the best course of action. 

All taxpayers should seek advice before responding to one of these letters. Our experts are here to discuss your position and help you proceed in the right way.

Offshore penalties and time limits 

Disclosures for overseas sources of income and gains, as well as some cases involving UK-sourced income for non-UK residents, are classed as offshore non-compliance. 

Tax liabilities for offshore non-compliance are subject to the requirement to correct (RTC) legislation. This legislation covers non-compliance for liabilities that were assessable for the tax year ending 6 April 2017. The scope for recovery of tax is much wider than compared to onshore income and assets.

Under the RTC legislation, individual taxpayers were given until 30 September 2018 to correct any offshore errors for the 2015/16 tax year and earlier. Taxpayers who failed to correct their offshore non-compliance may now face penalties of up to 200% of the liability.

The RTC legislation also extended the assessable time limits for offshore non-compliance. If offshore non-compliance is the result of non-deliberate behaviour, HMRC can raise an assessment to tax up to 12 years after the end of the relevant tax year. This is double the time limit for a comparable error for UK income or assets. These rules only apply with effect from 2013/14 for careless errors, and 2015/16 where reasonable care was taken.

There are specific criteria for the new rules to apply. It is important to take appropriate professional advice before any disclosure for offshore non-compliance.

How we can help

If you have recently received a letter from HMRC that contains a certificate of tax position or think you need to disclose an overseas tax issue, our team of tax dispute resolution experts can help you choose the right next step.

Our team includes chartered tax advisers and fully qualified HM Inspectors of Taxes, who have significant experience in dealing with offshore tax issues and disclosures. We’ll review your position and advise you on what to do.

Get in touch with us directly on +44 (0)800 032 8374 or via our dedicated mailbox at tax.disputes@rsmuk.com.