To encourage taxpayers to disclose offshore income, HMRC introduced the Requirement to Correct (RTC), giving taxpayers until 30 September 2018 to make a disclosure. WDF disclosures made after this deadline, when disclosing irregularities for tax years up to and including 2015/16, are subject to Failure to Correct (FTC) penalties. FTC penalties are significantly higher than standard offshore penalties, but can be reduced through submitting an unprompted disclosure, making it even more crucial to disclose irregularities as soon as you’re aware of them, and before HMRC nudges or prompts you to disclose.
The maximum penalty for a prompted disclosure under FTC is 200% of the unpaid tax. By submitting a full and accurate disclosure, an FTC penalty can be reduced to 150%.
The minimum penalty for an unprompted disclosure under FTC is 100% of the unpaid tax, provided the disclosure is full and accurate.
When disclosing irregularities for tax years after 2015/16, standard offshore penalties will apply. These penalties depend on the category of the territory your offshore interests relative to the disclosure falls under, as well as your behaviour, and if the disclosure has been prompted by HMRC.