Disclosure Opportunities

HMRC is convinced there is a large population who fail to declare all of their taxable income. So it has set up a permanent digital disclosure service (DDS) to allow individuals, companies and trustees to come clean about their tax affairs.

The DDS allows the taxpayer, or us as your tax agent, to make a declaration under any of the current open disclosure campaigns for:

  • Let Property
  • Second Incomes
  • Credit Card Sales; and
  • Worldwide Interests

However, to use the DDS the person has to set-up a government gateway account. As an agent you should already have Government Gateway login and password, so that should not be a problem.

The DDS can’t be used to correct errors on tax returns already submitted for SA, VAT, IHT, or payroll. It should not be used to report any incidence of tax fraud committed by the tax payer or by another person.

Worldwide-

The worldwide disclosure facility opened on 5th September 2016 to replace the various offshore disclosure facilities (including LDF) which closed last year. However, there are no special penalty reductions available with the worldwide disclosure facility, only a threat of more penalties if a full disclosure is not made by 30th September 2018.

After that date new legislation will come into affect which will impose a requirement on taxpayers to declare any UK tax liabilities relating to offshore interests. If the taxpayer fails to correct their UK tax declaration in respect of offshore interests, sanctions will be imposed. HMRC is consulting on the design and implementation of those sanctions.

HMRC is banking on the fact that from 2018 it will have access to vast amounts of tax information reported under the common reporting standard (CRS), from over 100 countries around the world. This CRS data will allow HMRC to identify UK taxpayers who have not fully declared their overseas interests. In addition, there is a separate initiative between; UK, Germany, France, Italy, and Spain to share data from registers of beneficial ownership of companies and properties.

Finally, you should be aware of a separate discussion document on strengthening tax avoidance sanctions and deterrents, which is explicitly aimed at tax advisers, accountants, financial advisers and anyone who helps to set up companies or other vehicles which are used in the implementation of tax avoidance. The penalties imposed upon the adviser in such cases could well exceed that paid by the taxpayer.