Dealing with HMRC – guidance

Offshore disclosure facilities

This guide explains how to apply, disclose outstanding liabilities, and make payments for your offshore investments and assets.

This guide explains how you can come forward and disclose outstanding liabilities relating to offshore assets for previous tax years. The disclosure facilties offer the quickest way of doing this alongside favourable terms that are not normally available. For the current year and previous year you’re still in time to file a Self Assessment tax return to declare any liabilities.

Overview

There’s nothing wrong with having investments overseas as long as you declare all taxable income and gains on your UK tax return.

These facilities give you the chance to bring all your tax affairs up to date if you have worldwide income that’s not been taxed before.

This guide explains why you must disclose information to HM Revenue and Customs (HMRC), how you disclose and what happens if you don’t.

Undeclared income offshore

If you need help to decide whether you’ve paid the right amount of tax, ask your adviser if you have one. They can help you check your affairs and discuss the options if you need to make a disclosure to HMRC. If you’re not sure, you can get help.

If you do have undeclared income and gains from your overseas accounts, contact HMRC now to clear up your past tax affairs. You should also make sure that you declare all relevant income and gains in your next Self Assessment tax return.

If you’re not resident in the UK for tax purposes (a UK taxpayer) you won’t usually be liable to pay tax in the UK on your offshore income and gains. You should check what’s taxable and check your residency status.

Why you should disclose now

Over 90 countries have committed to new international agreements that will let HMRC see more about overseas accounts held by you. If you have declared your taxable income and gains then you have nothing to worry about. But if you haven’t, and HMRC finds out you will face an investigation and will have to pay the undeclared tax, a penalty of up to double the tax you owe, and could even go to prison.

Using these disclosure facilities will avoid the need for an investigation and you may pay a lower penalty.

Financial institutions are already collecting information on your overseas accounts. HMRC will get much more information about your:

  • overseas accounts
  • insurance products
  • other investments, including those held through overseas structures such as companies and trusts

The information includes details of either:

  • who’s holding the account or asset
  • who owns the entity holding the asset including their:

    • name
    • address
    • date of birth
    • the balance of the account
    • payments made into it

HMRC will use this information to go after those who’ve not paid their taxes, so go to them before they come to you.

Disclosure facilities

If you aren’t paying the right amount of tax you may be able to tell HMRC using a disclosure facility and get the best terms on offer.

There are 4 main disclosure facilities available but time is running out as the opportunity they provide ends on the 31 December 2015.

The Liechtenstein Disclosure Facility (LDF)

The LDF is available to anyone who owned an offshore asset on 1 September 2009 and who at the time that they register to use the LDF own an asset in Liechtenstein. It doesn’t matter when you acquired the asset in Liechtenstein provided you own it when you register.

The 3 British Crown dependencies’ facilities

The 3 British Crown dependencies’ facilities are:

  • Isle of Man
  • Guernsey
  • Jersey

They’re available to anyone who owned an asset in the relevant territory at any time between April 1999 and 31 December 2013.

If you aren’t eligible to use a disclosure facility

If you’re not eligible but have UK tax liabilities to disclose, you should still take action to bring your affairs up to date.

If your outstanding tax is linked to the use of overseas accounts or other offshore structures, please contact HMRC’s Offshore Co-ordination Unit:

Telephone: 03000 530 310
Email: ocu.hmrc@hmrc.gsi.gov.uk