So, what do you do if you have income, perhaps from a property or perhaps even from offshore funds that you have not declared to HMRC? What choices do you have?
HMRC have access to more information than ever before and share information with financial institutions worldwide and are notified by Property Letting Agents regarding income from letting of properties.
The good news for you is that HMRC have opportunities for you to disclose the undeclared income to HMRC via the Digital Disclosure Service. Interest and penalties will be charged for the non declaration of the income on top of the tax that is due, but the penalties that will be charged will be less if you disclose first.
So our advice? Make the declaration before HMRC contact you. For those that fail to come forward, higher penalties or even criminal prosecution could follow.
Worldwide Disclosure Facility
HMRC’s Worldwide Disclosure Facility (WDF) opened in September 2016. It allows the disclosure of a UK tax liability relating wholly or partly to an offshore issue.
- Income arising from a source outside the UK
- Assets situated or held outside the UK
- Activities carried on wholly or mainly outside the UK
- Where the funds connected to unpaid tax are transferred outside the UK
- WDF applies for all tax years up to and including 2017 to 2018.
- If HMRC has sent you a tax return for that year or any tax year from 2014 to 2015 onwards which is still outstanding, you must complete the return and you must not include these tax years on this disclosure form.
Will need to disclose your behaviour which will indicate the number of years you need to disclose. i.e. 4, 6 or up to 20.
Anyone wishing to disclose a UK tax liability in relation to the above is eligible to use the WDF:
- Disclosures have to be made via the online Digital Disclosure Service
- You first need to notify HMRC that you will be making a disclosure.
Once you have notified HMRC, you will have 90 days to:
- Collate the information needed to complete the disclosure,
- Calculate the final liabilities including tax, duty, interest and penalties, and
- Complete the disclosure, using the unique disclosure reference number provided when notifying.
As part of the disclosure, you will have to self-assess your behaviour in relation to your tax affairs, ranging from careless to deliberate and concealed.
Let Property Campaign
HMRC’s Let Property Campaign is a disclosure opportunity which is aimed at property landlords who have failed to disclose rental income.
It opened in 2013 and was originally intended to last for 18 months. Some 6 years later there are still no signs of it being closed in the near future.
The campaign is open to all residential property landlords from those that have multiple properties, to single rentals, and from specialist landlords such as student or workforce rentals, to holiday lettings but it does not apply to companies or trusts or to non-resident landlords.
HMRC have worked with a variety of bodies to develop tools and guidance to support landlords of all types and help them get their affairs up to date.
HMRC will use information it holds about property rental in the UK and abroad, including Land Registry data, along with information already held on HMRC‘s digital intelligence system Connect, to identify people who have not paid what they owe.
Are you affected? Will you benefit from making a disclosure? Contact us today to arrange a FREE consultation, we have Chartered Accountants and Tax Advisers in Canary Wharf, Essex and Manchester waiting for your call.