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HMRC offshore disclosure facilities

HM Revenue & Customs (HMRC) offshore disclosure facilities provide an opportunity for eligible taxpayers with assets or investments held in British Crown dependencies and other overseas jurisdictions to bring their UK tax affairs up to date.

Removing Sword of Damocles

These facilities can be used to make a full disclosure of outstanding liabilities and pay any amount due – a ligitimate and beneficial way of regularising the past and future tax position.

Typically, our clients want advice so they can better understand the disclosure process, why they may choose to disclose information, how they can disclose, and what happens if they do not.

These matters may have been a heavy burden, which can be lifted in a relatively short space of time and release net taxed funds. Experience suggests that the individual may have quite literally inherited a problem and by taking experienced advice they can remove the Sword of Damocles. By evaluating the issue, it might be a case of registering with a financial institution to legitimately bring into affect a more suitable disclosure protocol to reduce or even eliminate the tax due.

The following general guidance is to help put this into context, but please do not hesitate to contact us for practical advice - following our recent liaison with HMRC Specialist Investigations Overseas Co-Ordination Unit and our experience in assisting clients chose the appropriate disclosure process.

Introduction to the disclosure facilities

First you will need advice on eligibility and how to best to use the array of disclosure facilities. This needs to be in a specific format and includes registration with HMRC, providing an outline of the types of accounts or other financial interests that your disclosure will relate to, what tax is excepted, timing of payment and so forth.

Advising how you can make your disclosure

Why should I make a disclosure?

If you are not paying the right amount of tax we can advise you on using a disclosure facility and get the best terms on offer. You may not be paying the right amount of tax if you have undeclared income, gains, an inheritance you have not told HMRC about, previously made an incorrect claim or are behind with your tax affairs.

What happens if I don’t tell HMRC?

HMRC has the right to pursue a criminal investigation in cases of tax fraud but an important factor in making this decision is whether a person has made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed.

So making a pre-emptive strike and disclosing to HMRC about it now and making a full and complete disclosure will remove the burden. For clarity, you will always receive better terms if you tell HMRC before HMRC comes to you.

How to make a disclosure: British Crown dependencies

HMRC has made disclosure facilities available as part of its commitment with the British Crown dependencies (Isle of Man, Guernsey and Jersey) to cooperate on tax matters.

If you are a UK taxpayer or your financial intermediary thinks you may be, your financial intermediary will contact you about the disclosure facility. However, it is your responsibility to apply to take part in the facility and you should not wait for your financial intermediary to get in touch before you apply. You can do this now.

Currently, the three agreements by way of a Memorandum of Understanding cover:

  • Isle of Man Disclosure Facility
  • Guernsey Disclosure Facility
  • Jersey Disclosure Facility