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UK TAX DISCLOSURE PREPARATION
Voluntary UK Tax Disclosures
If you have undeclared income from prior years, or if you have received a nudge letter from HMRC; there are several options available to bring your UK tax affairs up to date.
At Expat Tax Solutions, we analyse your historic income before preparing and submitting the UK tax disclosure to HMRC.
Worldwide Disclosure Facility (WDF)
The Worldwide Disclosure Facility (WDF) is a HMRC service allowing individuals to make UK tax disclosures to declare unpaid UK tax relating to income, assets or duties performed outside of the UK.
Individuals must register their UK tax disclosure with HMRC and then have 90 days to submit the necessary information to HMRC and pay the relevant taxes.
Penalties and interest are likely to be levied by HMRC however these are reduced for unprompted UK tax disclosures where the individual notifies HMRC of their requirement to disclose in advance of HMRC requesting the information.
Over 100 countries have committed to exchange information on a multilateral basis under the Organisation for Economic Co-operation and Development’s Common Reporting Standard (CRS) and therefore notifying HMRC of intent to disclose as soon as possible is key.
KEY WDF REQUIREMENTS
1
Register the disclosure with HMRC.
2
Provide all necessary information to HMRC within 90 days.
3
Pay the UK tax liability when the disclosure is made.
4
HMRC have 90 days to accept the disclosure or request further information.
LPC DISCLOSURE PROCESS
1
Determine your eligibility and whether the LPC applies.
2
Register the disclosure with HMRC.
3
Calculate the UK taxable income including any relevant deductions and expenses.
4
Declare the income and pay the tax to HMRC within 90 days.
Let Property Campaign (LPC)
The HMRC Let Property Campaign is an initiative designed to help landlords in the UK disclose any undeclared rental income. This campaign allows landlords to update their tax affairs and potentially reduce penalties.
UK tax non-residents remain liable to UK tax on their UK sourced income which includes rental income from UK properties which must be declared to HMRC.
UK tax residents are taxable in the UK on their worldwide income which includes rental income from foreign properties even if it is taxed abroad.
Individuals must register their UK tax disclosure with HMRC and then have 90 days to submit the necessary information to HMRC and pay the relevant taxes.
HMRC Nudge Letters
HMRC nudge letters are official communications sent to taxpayers to encourage voluntary compliance by highlighting potential discrepancies in their tax affairs.
Although nudge letters are not formal investigations, they generally mean that HMRC hold information suggesting a discrepancy in your tax affairs.
Nudge letters should be responded to with the help of a professional advisor to ensure all relevant income sources are declared.
Nudge letters may require submission of a UK tax disclosure via one of the below HMRC initiatives:
- Worldwide Disclosure Facility (WDF)
- Let Property Campaign (LPC)
- Digital Disclosure Service (DDS)
We support clients with responding to nudge letters and formal investigations ensuring their tax affairs are up to date and penalties are minimised.
Our Simple 4 Step Process
1
Register the Disclosure
We must first register the UK tax disclosure with HMRC through their Digital Disclosure Service. We then have 90 days to prepare and submit the disclosure.
2
Prepare the Disclosure
We have a call to discuss your circumstances and obtain the information necessary to prepare your UK tax disclosure.
3
Submit and Pay
We submit the UK tax disclosure to HMRC on your behalf at which point you must pay the outstanding tax to HMRC.
4
HMRC Accept
HMRC then have 90 days to accept the UK tax disclosure or request further information after which the disclosure is resolved.
Frequently Asked Questions
You must only report income on your tax return if it was received in that year. Tax returns can be submitted up to four years after the end of the tax year and older income must therefore be disclosed separately however a multi-year disclosure may be preferable to submitting multiple tax returns.
Historic foreign income should be disclosed to HMRC via the Worldwide Disclosure Facility (WDF).
Historic rental income should be disclosed to HMRC via the Let Property Campaign.
If a disclosure is required, HMRC should be notified as soon as possible. You will then typically have 90 days to disclose the relevant income and pay the associated tax.
Penalties are subject to the actions of the taxpayer ranging from as low as no penalties for careless behaviour up to 200% of the tax due for deliberate and concealed behaviour. HMRC are also likely to levy interest from when the tax should've originally been paid.