HMRC Worldwide Disclosure Facility – India

Step by Step Guide

Background

If you received a HMRC letter about your money or assets abroad and after having checked your tax affairs you find that you need to make a disclosure – you will  need to use this facility.

Step 1 – Where possible, contact HMRC. They may give you more information about the assets in question, which will help focus the review of tax affairs. However, there’s no guarantee they’ll share anything with you.

Step 2 – Send the certificate back to HMRC after ticking box 1

Step 3 – Register for the Digital Disclosure Service (DDS)

Step 4 – We have now 90 days to:

  • Gather the information to fill in the disclosure
  • Calculate the final liabilities including tax, duty, interest and penalties on a year by year basis.
  • Fill in the disclosure, using the unique disclosure reference number (DRN) given on notification
  • Gather information on maximum value of overseas assets you have in the past 5 years

Complete and true – Disclosure should be complete and full co-operation needs to be given to HMRC

Number of years– Taxpayer will also need to self-assess their own behaviour, based on this assessment, tax payer will be presented with the number of years disclosure needs to be made.

12 yearsNon-deliberate (see below bonus point 2)
up to 20 Dishonest behaviour

This will also have an effect on the quantum of penalty to be charged.

See Example of Offshore Penalty Calculation

Tax Calculation – We need to be aware of the effect of Double Taxation Agreements for this DTAA Digest and HS 263 will come handy.

Step 5 – It’s a condition of using this facility that we make an offer for the full amount of taxes, duties, interest and penalties owed.

We must make full payment in accordance with the disclosure on the same date that the disclosure is submitted.

We will get an acknowledgement from HMRC within 15 days of them getting the completed disclosure. They will aim to tell us of the intended course of action within 90 days of the acknowledgement.

Bonus:

  1. Penalty calculation – India is not on the list thus falls in the residual category 2.
  2. Time period for offshore assessments was changed in 2019. This override RTC Regulations. Earliest year for if reasonable care taken is 2013/14. If behavior careless earliest year is 2011/12. These time periods will change on 6th April 2021.

Source:

HMRC Guidance

Further readings:

  1. Taxation of Interest Income from NRE / FCNR Deposits.
  2. Taxation of LIC Policy in UK.

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