Worldwide Disclosure Facility penalty assessments – update from HMRC

6 Sept 2021

HMRC have provided us with the following information about penalty assessments in relation to protective assessments issued earlier this year on Worldwide Disclosure Facility (WDF) cases.

The Worldwide Disclosure Facility is available for customers to make a voluntary disclosure to HMRC relating wholly or partly to an offshore issue. The process is intended to help customers bring their tax affairs up to date and, usually, cases are settled by way of a contract settlement, which is an efficient way of resolving matters.  When customers choose to disclose this way, they can self-assess any tax they owe, together with the related penalty. The majority of disclosures made this way will not result in an in-depth enquiry. 

Earlier this year HMRC made assessments in respect of offshore tax disclosed to them, following the introduction of the Requirement to Correct (RTC) legislation (Schedule 18 F(No2)A 2017).  The RTC rules extended some assessing time limits, which ran out on 5 April 2021. 

Where a settlement had not been agreed with HMRC we contacted customers and made an assessment to ensure it was within the time limit. This does not mean we will stop trying to resolve matters through a contract settlement where that is possible and the customer agrees.

Following the assessment of the tax HMRC will now be reviewing the related penalty position.

HMRC are now contacting customers and their agents to talk about the circumstances that led to their offshore income not being declared.  HMRC want to give customers the opportunity to share their reasons and any mitigations so they can be carefully considered when assessing what penalty is owed.  HMRC will send a letter to customers and their agents to prepare them that HMRC will be calling and will be happy to agree a convenient time for that more detailed conversation to take place.

Following that call customers will receive a penalty explanation letter, clearly setting out the penalty that will be charged – assuming HMRC conclude that is one due. Customers will then have an opportunity to tell HMRC about any further evidence impacting their penalty position, before a penalty assessment is raised 30 days later.  This approach does not affect customers’ rights to appeal that penalty assessment, should they wish to do so.

If you are a customer who appealed the protective assessment and agreed with HMRC to settle your disclosure by contract settlement HMRC will already have discussed your penalty position and will not need to contact you again.