Where are we now: LK Obtains Latest WDF Statistics from HMRC

Posted On: 30 Jun 2021

Earlier this year, our own Amit Puri (Managing Director – Tax Investigations & Disputes Practice) provided an update to the article he first wrote in June 2020 for the Institute of Certified Practising Accountants (ICPA) bi-monthly magazine. In his article and subsequent update/post, Amit examined HMRC’s Worldwide Disclosure Facility (‘WDF’) statistics and asked the question –where are we now?

Since publishing those articles, Amit has once again followed up with HMRC’s Information Office again to obtain the very latest figures for 2020/21.

Background:

As previously mentioned, the Common Reporting Standard (‘CRS’) was created to provide a global framework which underpins all newer international financial accounts information exchange agreements. It enables over 100 jurisdictions to share rich banking data with one another annually and automatically, without the need to make case specific requests.

Most within the industry agree this helped to enhance HMRC’s ability to detect offshore tax non-compliance, and consequently potential failures by UK individuals. Though many wondered whether or not this was just another sledgehammer approach by HMRC to try and crack a smaller nut type of tax risk.

WDF Statistics:  2021 Figures

Year Number of WDF ‘notifications of intent’ to disclose Number of WDF ‘disclosures received’
2016 211 88
2017 4,368 2,833
2018 15,244 8,334
2019 4,468 8,255
2020* 1,459* 1,108*
2021 4,650
Total c. 24,000

*2020 values were up to 13/05/2020

What do these figures tell us?  Still not very much in our view.

Year Tax Interest Penalties WDF Total
2016

 

£995,598 £142,590 £106,642 £1,244,831
2017

 

£25,469,102 £4,510,624 £3,238,601 £33,218,328
2018

 

£81,267,286 £9,885,174 £9,279,856 £100,432,317
2019

 

£129,578,030 £20,569,685 £20,774,308 £170,922,024
2020*

 

£8,655,598 £965,446 £3,380,107 £13,001,152
2021

 

£48,995,945 £4,380,074 £16,327,984 £69,704,003
£318,818,652

*2020 values were up to 13/05/2020

Analysis:

Interestingly in the year 2020-21 the number of WDF disclosures submitted to HMRC ramped up significantly, as did the revenues secured by HMRC. From our own experience, many more taxpayers sought specialist advice from us following receipt of letters from HMRC informing them that they had offshore banking data at their disposal.

The take home message remains, that all those people who waited for HMRC to contact them, had by then lost the ability to make voluntary disclosures, therefore being unable to secure the minimum FTC financial penalties. Instead they had to face the battle where 150% minimum penalties applied!

It would appear then that there remains the significant problem where the number of WDF disclosure made to HMRC were tiny compared to the considerably larger number of accounts notified to HMRC by other jurisdictions.

If we take as an example the 2018/19 figures, we can see that a total of 16,589 disclosures were submitted to HMRC. If we then compare this against the financial accounts reported to HMRC in say 2017 or 2018 we see that the numbers were circa £3m and £4m, which exponentially eclipsed the number of disclosures made, even assuming all were prompted by HMRC letters.

Do readers agree that the number of disclosures made look disproportionately low?

From anecdotal evidence within the tax risks sector, we still strongly believe the numbers of disclosures made under the WDF are heavily and directly influenced by the volume of informal written prompts (aka ‘nudge letters’) sent by HMRC. Such letters confirm that HMRC have information from other counties, about the recipients’ non-UK financial accounts, and recommend that disclosures be made if appropriate.

Our team are in agreement that HMRC need to do much better in this regard. We know they have huge amounts of bulk data about ‘millions’ of such financial accounts, and continue to receive more data year on year.

How we can help?

We believe it’s in a client’s best interest to discuss these types of matters with an ‘independent specialist’ even if there are no discrepancies to disclose. The right help at the right time ensures that HMRC are effectively managed and enquiries and disclosures are concluded expeditiously.

Our team are experts at resolving contentious tax issues accurately and efficiently. We are highly adept at managing our clients’ interactions with HMRC to ensure processes run smoothly and that our clients’ interests are best protected at all times.

Importantly, we deliver that all-important trusted ‘buffer’ between our client and HMRC during their in-depth and intrusive investigations and in all voluntary disclosures too.

Get in touch to learn more about how Amit and the Tax Investigations and Disputes team have successfully guided clients through the COP9 or COP8 investigation processes.

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