Updated WDF Statistics from HMRC
Last year in June, Amit Puri (our Managing Partner – Tax Investigations & Disputes) 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 in February 2021, 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 to obtain the very latest figures for 2021/22.
Background:
As previously covered, 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: 2022 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 |
| 2022 | – | 7,834 |
| Total | c. 33,100+ |
*2020 values were up to 13/05/2020
What do these figures tell us? A huge 68% increase in the number of WDF disclosures submitted in 2021/22.
| 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 | |
| 2022 | £57,167,247 | £5,419,231 | £16,590,789 | £79,177,267 | |
| Total
|
£397,995,919 | ||||
*2020 values were up to 13/05/2020
Analysis
Interestingly in the year 2020-21 the number of WDF disclosures submitted to HMRC had ramped up significantly, as did the revenues secured by HMRC. Also, this continued through to 2021/22, with a 68% increase in the number of disclosures submitted. Correspondingly, the total tax, interest and penalty revenues increased by almost £9.5 million.
From our own experience, many more taxpayers sought specialist, independent advice from us following receipt of ‘nudge’ or enquiry 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 wholly voluntary disclosures, therefore being unable to secure the minimum FTC financial penalties (100%). Instead they had to face the battle where 150% minimum penalties applied!
But it would appear there remains the same, significant problem for HMRC wherein the number of WDF disclosures made to them were still miniscule compared to the considerably larger number of non-UK accounts notified to HMRC by other jurisdictions.
If we take as an example the 2018 and 2019 figures, we can see that a total of 16,589 disclosures were submitted to HMRC over those two years. If we then compare this against the number of non-UK financial accounts reported to HMRC in say 2017 or 2018 we noted that these were circa 3m and 4m, which thus exponentially eclipsed the number of WDF disclosures made, even if assuming all of them were prompted by HMRC letters.
HMRC’s clear deficient / lack of action, even though they are armed with so much banking data they would have one believe they are at bursting point, is resulting in the underwhelming numbers of disclosures and thus historic taxes not being repaid. Worryingly, we have provisional data from HMRC covering the period to 5th August 2022 i.e. one third of the current tax year. Surprisingly, this shows only 12% of the number of disclosures for 2021/22 have been submitted (976 compared to 7,834), and thus only 16% of the total yield has been secured (£12.6 m compared to £79.2 m).
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 countries, 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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