Worldwide Disclosure Facility (WDF) – helping to settle offshore matters

The Worldwide Disclosure Facility, or WDF, is a process of voluntary disclosure to HMRC if you owe UK taxes relating to offshore matters. Following increased international transparency, the UK government encourages voluntary disclosures under normal UK tax rules.

If you receive a HMRC ‘nudge letter’, then you may need to correct your tax position using the WDF or another disclosure process, depending on your circumstances.

Penalties and Requirement to Correct

Sanctions under Requirement to Correct (RTC) were introduced in 2018 to reflect HMRC’s tougher stance - in particular, there are higher penalties for Failure to Correct (FTC). HMRC writes to people it thinks have failed to tell them about all their offshore income or gains, nudging them to correct their position.

If you have received a letter from HMRC, or think you may need to use the Worldwide Disclosure Facility, it is best to take professional advice on your position. Our Tax Dispute Resolution team is a national group of 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 including partner-led advice. We represent taxpayers with HMRC through the process, often working alongside your regular accountant or other professionals like lawyers, trustees or executors. There are lots of ways we can support and guide you to the settlement of the process - these are usually one-off projects leading to a closure letter from HMRC.

Book online or call our helpline on 0808 2815 890 for a free, no-obligation conversation with one of our team to discuss your tax problem and see if we can assist.

5 reasons to get support through the WDF process

Worldwide Disclosure Facility Penalty Rates

Penalties under the Worldwide Disclosure Facility vary depending on your circumstances. The maximum Failure to Correct penalty for a prompted disclosure is 200% of the unpaid tax - this can be reduced to 150% by submitting a full and accurate disclosure. The minimum penalty for an unprompted (voluntary) disclosure is 100% of the unpaid tax, if full mitigation is unavailable. Other penalties can apply, depending on what you disclose.

Cooperation and full disclosure with HMRC through a professional adviser will also help to reduce penalties. We can help make representations if there is a case that the penalties should be lower.

No immunity from prosecution

The Worldwide Disclosure Facility process provides no immunity from criminal prosecution. Tax evasion is a criminal offence. Other disclosure processes, specifically the Contractual Disclosure Facility or Code of Practice 9, do provide immunity from prosecution. It is important to get advice upfront about the most appropriate process for you given the significant differences in potential outcome. 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.

Tax investigation time limits - do you have to go back 20 years?

UK tax legislation identifies three main categories of behaviours: innocent, careless (similar to negligence) and deliberate (similar to fraud) behaviour. These behaviours determine the three main time limitations to charge back taxes of either four, six or 20 years respectively. However, in certain offshore cases, a 12-year time limit now replaces the four- and six-year rules. This is a particularly compliated area and certainly requires a TDR expert to understand and apply the relevant time limit. Having the right adviser can make a massive difference to amount of tax, late payment interest and penalties that you are charged in WDF cases.

Tax treaties and foreign tax credits

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 expert analysis of tax treaty arrangements between the countries and calculation of Foreign Tax Credits.

Reporting foreign investments in the UK

Reporting foreign investments in the UK can be incredibly complex and requires expert analysis. Even calculating rental income and expenditure accounts using UK rules can produce a different answer compared to the country of origin. Currency exchange rates, the UK tax year, the sites of assets and different rules for income and capital gains all add to the complexity. 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 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.

How we can help

Before you commit to using the Worldwide Disclosure Facility, you should consult a tax disputes expert to fully assess your situation and options. Every taxpayer is unique, and taking the time to engage a specialist can mean much better outcomes from HMRC.

Our specialist Tax Dispute Resolution team is part of the BDO private client global network. We have existing relationships in tax jurisdictions all over the world, and can combine our UK tax expertise with local in-country specialists to resolve complex offshore disputes. 

Book a free, confidential call with the team today, and take a step towards putting your tax affairs right.