Ex Senior Tax Inspector Amit Puri Provides Up-To-Date Statistical Information from HMRC on the Worldwide Disclosure Facility (HMRC WDF)
Amit Puri - MD of Pure Tax Investigations
Pure Tax Investigations: HMRC Investigation Specialists, is happy to announce the release of its latest article for AccountingWEB, ‘Should HMRC ramp up offshore liability nudge letters?’ which has been written by founder and managing director Amit Puri to provide up-to-date statistical information from HMRC on the Worldwide Disclosure Facility.
With 10 years of direct experience at HM Revenue and Customs and over 11 years in the private sector, Amit Puri leverages his specialist dispute resolution expertise to analyse the facts and figures concerning HMRC WDF related “nudge-letters” as well as the non-disclosure related action taken.
Pure Tax Investigations have become renowned for its pragmatic, client-centric approach, offering clear and bespoke tax advice tailored to each client’s unique tax concerns and business aspirations. Utilising a wide range of local and international accounting and tax knowledge, the HMRC tax investigation specialists provide peace of mind and certainty to clients by ensuring HMRC is effectively managed.
What is the Worldwide Disclosure Facility (HMRC WDF)?
“Fresh data on the number of disclosures of offshore tax liabilities appears to correlate closely to the number of nudge letters sent by HMRC” said Amit.
The Worldwide Disclosure Facility (WDF), which can be used to disclose a UK tax liability relating to an offshore issue, has now been running since September 2016.
It’s still running, providing individuals who have earned income or achieved gains overseas with a streamlined opportunity to bring their tax affairs up to date, by means of making a voluntary disclosure through an online portal. Provided a full and complete disclosure is made, there is no need to meet HMRC face-to-face or engage in numerous rounds of correspondence about the facts.
“Making such disclosures to HMRC can be uncomfortable, as one must recount what has been done (or not) and explain why. Experienced tax investigation and disclosure specialists will understand this part well and seek to provide peace of mind to their clients, while keeping abreast of WDF developments and HMRC’s practices” added Amit.
What do the WDF disclosure statistics show?
Let’s start by reviewing the number of WDF disclosures received by HMRC and the number of nudge letters, or one-to-many letters, as HMRC likes to call them nowadays, that were sent. The article has detailed figures, but some 53,000 WDF disclosures have been made.
Analysis of WDF statistics?
What do these figures tell us? From the WDF’s humble beginning in September 2016 where 88 disclosures were received (presumably in the calendar year), then ramping up in 2017, and then the most ever were received in 2018 and 2019 per year. This coincided with the RTC window where disclosure submission deadlines were extended for many. This was so that disclosures could still be based on the regular offshore penalties regime. After that window closed, all disclosures had to be based on the newer, much more aggressive failure to correct (FTC) offshore penalties regime – for tax years up to and including 2015/16.
Staying on penalties for a moment, the average penalties per disclosure has remained quite flat. Averaging a little over £1,000 at their lowest, and up to about £2,500 for other years. However, we expected them to rise over time as more FTC penalties were expected.
WDF disclosure numbers remaining flat
We don’t need to be surgical here, as it is safe to say the number of WDF disclosures received annually has remained quite flat too, which again is quite surprising. But, notably, the number of nudge letters sent out by HMRC has decreased in relative terms over the years, despite more offshore financial accounts data being available to HMRC and their supposedly advanced IT and innovative analysis tools.
So it doesn’t come as a surprise to see that the average taxes secured per disclosure have not increased over time. This is despite the newer extended 12-year tax assessing rule for offshore matters being introduced. One should expect there to be more tax years included in WDF disclosures over time, all other things being equal.
On the face of it, there seems to be no good reason for the average taxes recovered figures to be much lower for 2021/22, and for it being much higher for 2022/23. There seem to be anomalies.
Fewer WDF disclosure nudge letters
Interestingly though, it could be that the significant reductions in the number of nudge letters sent in 2021 and 2022 have contributed to the lower yields from disclosures in 2021 onwards. We compared this to the higher tax revenues in earlier years when a lot more nudge letters were sent out.
It is clear that annual revenues from WDF disclosures have never recovered, and neither have the number of nudge letters sent out. Is that because HMRC is incapable of doing more, being lazy perhaps or just lost under all that data? Perhaps there is a better answer, like HMRC ramping up the number of regular on-to-one inquiries using the offshore financial accounts data. But from our experience and hearing anecdotally, this doesn’t seem to be the case.
The article has detailed figures, but in total some £815,654,804 has been raised in taxes, interest and penalties.
It is great to see some £665m secured in taxes to date, through the WDF. When we include associated late payment interest and penalties thereon, the total revenues are £816m. This excludes the future benefit of voluntary compliance, where clients maintain their correct footing and file accurate tax returns as appropriate.
It is positive to see such numbers coming out of a disclosure facility where the one-to-many approach is deployed and not more resource-intensive inquiries. But we would have liked to see how non-disclosure offshore compliance activities have performed too, to draw a conclusion on which approach was working better.
Could HMRC do more to encourage more WDF disclosures?
We don’t believe so. There seem to be material issues with handling the offshore financial data and/or the quality of that data. It is plain to see the number of WDF disclosures made has remained painfully minuscule compared to the enormous volume of banking data available…
As an example, look at the number of disclosures received for 2018 and 2019 – a total of 16,589 – but consider the number of offshore accounts reported to HMRC in say 2017 or 2018 – around 3-4m. The data exponentially eclipsed the number of disclosures.
Also, in May 2022, HMRC reported that in 2019, UK residents had some £850bn in offshore financial accounts.
Further, in their No Safe Havens 2019 report, they reported to have received some 5.67m records in 2018 alone pertaining to offshore bank accounts.
HMRC’s lack of ambition and action has shone through for some time, despite being armed with so much offshore banking data they could swim in it.
Some of the tax services offered at Pure Tax Investigations include:
Tax Disclosures: The tax investigation specialists in London help clients navigate the tax disclosure facilities (amnesties) available to facilitate the disclosure of historic income and gains linked to offshore accounts and assets, property rental profits and crypto gains.
Tax Investigations: HMRC has extensive powers to carry out enquiries (compliance checks) into all tax returns to make sure an entrepreneur or business has paid the right amount of tax at the right time. Also, there are even more intrusive and in-depth investigations that are pursued; resource intensive. Pure Tax Investigations is an independent, experienced firm of Tax Investigation Specialists that helps entrepreneurial individuals and businesses through each stage of the extensive investigation process.
Code of Practice 8 (COP8) Advice: Pure Tax’s’ Code of Practice 8 investigation specialists offers expert guidance on “Code of Practice 8” (COP8 or COP 8), a serious tax investigation carried out by HMRC’s Fraud Investigation Service (FIS) where they suspect tax fraud or tax avoidance which has potentially led to a large loss of tax.
Code of Practice 9 (COP9) Guidance: Pure Tax’s COP 9 investigation specialists helps to provide clarity and robust defence on Code of Practice 9 (COP9 / COP 9 in short), which are serious civil investigations undertaken by HMRC’s Fraud Investigation Service (FIS) where they suspect tax fraud has occurred and they prefer to make the allegation at the outset and recover the tax on a civil basis rather than pursue a criminal tax investigation with a view to prosecution.
“We consider each client’s situation individually to ensure their tax affairs are structured efficiently and meet their commercial aspirations, including matters concerning succession and Inheritance Tax and property portfolios. Trust us: Tax Investigation Specialists London,” furthered Amit Puri.
Pure Tax Investigations encourage individuals interested in reading its full article or wishing to schedule an in-person appointment with the expert team to visit their website today.
About Pure Tax Investigations
Founded by ex-senior Tax Inspector Amit Puri, who boasts over ten years of direct experience at HM Revenue and Customs, Pure Tax Investigations is a tax investigation specialists boutique firm, offering expert Tax Investigations and Disputes, Business Enquiries and Disclosures support. Along with wider HMRC specialist support to their clients and their existing advisers, as well as some tax restructuring, estate planning and other tax advisory services.
CONTACT: Pure Tax Investigations, 63 St Mary Axe, London, EC3A 8AA, United Kingdom 0203 7575 669 https://pure-tax.com/
How can we help with WDF disclosures?
If you or your client has been contacted by HMRC about non-UK / offshore income and accounts then we can help steer that disclosure process, to keep it on track and focused, to bring about a swift conclusion. We will fully review the underlying records to identify investment interest income, dividends, and gains on assets, so that we robustly prepare annual tax calculations. We are not in the business of procrastinating.
Importantly, we deliver that all-important trusted ‘buffer’ between our clients and HMRC during their in-depth and intrusive investigations and in all voluntary disclosures too.
So it should come as no surprise that we still strongly believe the number of WDF disclosures made has always directly been influenced by the number of nudge letters sent by HMRC.
From experience and speaking to other practitioners, we noted that HMRC has been writing to people with much smaller levels of income overseas and/or those who have not been in the UK for long. That too signals the end of any low-hanging fruit era. But the take-home message remains that, those who wait for HMRC to contact them lose the ability to make a wholly voluntary disclosure and are therefore unable to secure the minimum FTC penalties (100%). Unfortunately, prompted FTC penalties start at 150%.
It is still a good time to review a client’s overseas activities, accounts and wealth to ensure UK taxes on investment income and gains are correctly calculated, disclosed and paid. We encourage seeking out specialist tax disclosures advice where there is a lack of experience in making them and handling corresponding inquiries, to secure the very best possible outcomes for our clients, based on robust knowledge about tax assessment rules regarding time limits, the various offshore penalty regimes that apply, and double taxation relief quirks.
Get in touch to learn more about how Amit and the Tax Investigations and Disputes team have successfully guided clients through the LPC disclosure, compliance checks, COP9 or COP8 investigation processes.
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