HMRC Worldwide Disclosure Facility: Fixing Undeclared US Income

The Worldwide Disclosure Facility is HMRC's route for disclosing UK tax owed on offshore income, gains or assets. A UK resident with undeclared US income notifies HMRC online, receives a Disclosure Reference Number, and then has 90 days to submit the figures, the interest and a self-assessed penalty, and to pay. Coming forward before HMRC makes contact is what keeps the penalty at the low end of the range.

For Americans in the UK, and for British people with US assets, the usual story is not concealment. It is an assumption that turned out to be wrong: that income taxed in the US did not need reporting in the UK, that an IRA or a US brokerage account was outside HMRC's reach, or that a rental property back home was a US matter only. A UK resident is generally taxed on worldwide income, so each of those can leave years of UK tax unpaid. This guide explains how the facility works and what it costs, using HMRC's own published guidance.

What is the Worldwide Disclosure Facility?

The Worldwide Disclosure Facility is a disclosure process, not an amnesty. GOV.UK says anyone who wants to disclose a UK tax liability that relates wholly or partly to an offshore issue can use the facility. It offers no special terms and no reduced penalty rates. What it offers is a defined procedure, a fixed timetable and the benefit of the lower penalty ranges that apply to a disclosure HMRC did not have to prompt.

An offshore issue, in HMRC's terms, covers unpaid or omitted tax relating to:

• income arising from a source in a territory outside the UK;
• assets situated or held outside the UK;
• activities carried on wholly or mainly outside the UK;
• funds connected to unpaid UK tax that have been moved or are held abroad.

The United States is offshore for this purpose. Dividends and interest in a US brokerage account, rent from a US property, a gain on selling US shares or a US home, distributions from a US trust and self-employment income from US clients are all within scope if they should have been on a UK return and were not.

Who needs to use the Worldwide Disclosure Facility for US income?

You need the Worldwide Disclosure Facility if you were UK resident in a tax year, had US income or gains that were taxable in the UK, and did not report them correctly. The most common situations we see described are these.

Situation	Why UK tax was missed
American employee in the UK with a US brokerage account	Salary taxed under PAYE, so no UK return was ever filed; US dividends and gains were reported only on Form 1040.
US rental property kept after moving to the UK	Rent reported to the IRS and assumed to be a US matter; the UK also taxes it, with relief for the US tax.
Former remittance basis user	Foreign income was brought to the UK without the remittance being reported, or the remittance basis was assumed without being claimed.
British citizen who returned from the US	US accounts, a 401(k) or a US property kept after the move back, with income never added to the UK return.
Recipient of US trust or estate distributions	Distributions treated as capital when UK rules tax some or all of them as income or gains.

Whether a year needs disclosing starts with residence, which is decided for each tax year by the Statutory Residence Test. For years before 6 April 2025 the remittance basis may also be relevant; our guide to the non-dom changes for Americans in the UK explains what changed. If the only problem is a return that is late, with nothing left off it, the ordinary late filing rules in our guide to the late Self Assessment penalty apply instead.

Why HMRC is likely to find it

GOV.UK notes that more than 100 countries exchange financial account information under the OECD's Common Reporting Standard. The United States is not part of that standard, but the UK and the US exchange information under a separate automatic exchange agreement. HMRC uses the data it receives to write to taxpayers whose returns do not appear to match. A disclosure made after one of those letters is a prompted disclosure, and the penalty ranges for it are higher.

How the Worldwide Disclosure Facility process works

1. Notify HMRC. You tell HMRC that you intend to make a disclosure, using the Digital Disclosure Service. You do not need the figures at this stage. An adviser can notify on your behalf.
2. Receive your reference numbers. HMRC acknowledges the notification and issues a Disclosure Reference Number and a Payment Reference Number.
3. Prepare the disclosure within 90 days. GOV.UK says you must make your disclosure within 90 days after getting the acknowledgement that quotes your Disclosure Reference Number. In complex cases you can ask for more time, up to 180 days in total.
4. Calculate tax, interest and penalties yourself. The disclosure sets out the income or gains and the tax for each year, the interest, and the penalty you believe is due. You self-assess your own behaviour, and you state the maximum value of your offshore assets over the last 5 years in pounds sterling.
5. Submit and pay. GOV.UK says payment of the full disclosure amount at the time of submission is a requirement of the facility. If you cannot pay in full, you contact HMRC before you submit.
6. HMRC responds. You receive an acknowledgement within 15 days, and HMRC aims to tell you its intended course of action within 90 days of that. It may accept the disclosure, ask for evidence, or open an enquiry if it cannot accept what you have sent.

The disclosure ends with a formal offer. HMRC's guide to making a disclosure says that once HMRC accepts it, your offer and HMRC's acceptance letter create a legally binding contract. The 90 days start when HMRC acknowledges the notification, so the practical advice is to gather US statements and work out the scale of the problem before notifying, not after.

How many years does a Worldwide Disclosure Facility disclosure cover?

The number of years depends on why the tax was not paid. HMRC's guide to making a disclosure gives the following limits, and the facility requires you to decide which one describes your conduct.

Behaviour	Maximum years
You took reasonable care and still got it wrong	4 years
Careless	6 years
Offshore matter, where the lost tax is harder for HMRC to identify	12 years, with 2015 to 2016 as the earliest year, or 2013 to 2014 where carelessness is involved
Deliberate	20 years
Never registered for Self Assessment when you should have	Up to 20 years

The 12-year rule is the one that surprises people with US income. HMRC's Compliance Handbook at CH53510 explains that for Income Tax and Capital Gains Tax from 2015 to 2016 onwards, the 12-year limit for offshore matters applies whether or not the person took reasonable care. It does not apply where HMRC had already received relevant overseas information in time to assess within the normal limits. In practice, an innocent omission of US income can reach back much further than the 4 years that would apply to a purely UK mistake.

GOV.UK also confirms the outer edges: disclosures can currently include years up to and including 2024 to 2025, and liabilities more than 20 years old cannot be disclosed through the Digital Disclosure Service.

What are the offshore penalties?

Offshore penalties are a percentage of the tax, set by three things: your behaviour, whether the disclosure was prompted, and the territory the income came from. HMRC's factsheet CC/FS17 divides territories into three categories based on how willing each is to share information with the UK, with maximum penalties of 100%, 150% and 200% of the tax.

The ranges for an inaccurate return, for 2016 to 2017 and later tax years, are:

Category and disclosure	Careless	Deliberate	Deliberate and concealed
Category 1, unprompted	0% to 30%	30% to 70%	40% to 100%
Category 1, prompted	15% to 30%	45% to 70%	60% to 100%
Category 2, unprompted	0% to 45%	40% to 105%	55% to 150%
Category 2, prompted	22.5% to 45%	62.5% to 105%	85% to 150%
Category 3, unprompted	0% to 60%	50% to 140%	70% to 200%
Category 3, prompted	30% to 60%	80% to 140%	110% to 200%

HMRC publishes the list of territories in each category; check it for the country your income came from before you calculate. Where you took reasonable care, there is no penalty at all, although HMRC's guide observes that few people fall into that group. Separate tables in the factsheet cover failing to notify HMRC that you were chargeable to tax, which is the relevant penalty for someone who never registered for Self Assessment.

Where a penalty lands within its range depends on the quality of the disclosure: how much you tell HMRC, how much help you give and how much access you allow. The factsheet adds one restriction that matters for old problems. If it has taken a significant period, normally 3 years, to correct the non-compliance, HMRC restricts the reduction so that the penalty is at least 10 percentage points above the minimum of the range.

The Failure to Correct penalty for older years

Older years are treated more harshly. The Requirement to Correct obliged taxpayers to put right offshore non-compliance by 30 September 2018, and GOV.UK states that it is now too late to make a compliant correction. Factsheet CC/FS17 explains the consequence. For Income Tax and Capital Gains Tax owed for 2015 to 2016 and earlier years that was not corrected in time, a Failure to Correct penalty applies in place of the normal ranges. The standard rate is 200% of the tax, reduced to a minimum of 100% for a voluntary disclosure and 150% where HMRC made contact first. Behaviour and territory category make no difference to it.

Asset-based and asset moves penalties

Two further penalties exist for the most serious cases. The asset-based penalty can apply where there is a deliberate penalty or a Failure to Correct penalty and the tax at stake exceeds £25,000 in a single year; its standard amount is the lower of 10% of the asset's value or 10 times the offshore tax at stake. A separate penalty of 50% of the underlying penalty applies where assets were moved between territories to prevent or delay discovery.

Illustrative example: Megan is a US citizen who has been UK resident since 2018. Her UK salary is taxed under PAYE and she has never filed a UK tax return. She kept a US brokerage account that pays dividends, which she reported on her US returns each year. In 2026 she learns the dividends were also taxable in the UK. Nobody at HMRC has contacted her. She notifies through the Digital Disclosure Service, receives her Disclosure Reference Number and has 90 days to submit. Because the income is an offshore matter, the years in scope are not limited to four. For each year she works out the UK tax on the dividends, checks what relief is available for US tax, adds interest, and assesses a penalty for failing to notify HMRC, using the unprompted range for her behaviour and the territory category. Had she waited for an HMRC letter, the same facts would have put her in the prompted range, with a higher minimum.

Does US tax already paid reduce the UK bill?

Often it does, and this is where a disclosure involving US income differs from most others. The income has usually been taxed once already. GOV.UK says you can usually claim Foreign Tax Credit Relief when you report overseas income, and that you may not get back the full amount of foreign tax you paid, particularly where a tax treaty sets a lower rate.

Three points need care in a disclosure:

• Which country taxes first. For a US citizen, the treaty rules on which country has the primary right to tax differ by type of income. On some income the UK gives the credit; on other income the UK taxes first and the adjustment is made on the US return. Our guide to double taxation relief between the US and UK sets out the order.
• Time limits on relief. Claims for relief have their own deadlines, which do not automatically extend as far back as HMRC's power to assess. For older years the UK tax can be due with less relief than expected.
• The US return may need amending. Paying UK tax for earlier years can change the foreign tax credit position on US returns already filed. The two sets of corrections should be planned together.

Penalties are calculated on the UK tax actually lost, so relief that reduces the tax also reduces the penalty. Interest runs from the date the tax should have been paid until it is paid, at HMRC's published rates. Our guide to Foreign Tax Credit Relief in the UK explains how the credit is calculated.

What people get wrong about the Worldwide Disclosure Facility

• Notifying before they understand the numbers. The 90-day clock starts at acknowledgement. Collect US brokerage statements, Forms 1099 and US returns for every year first.
• Assuming four years is the limit. For offshore matters the reach is up to 12 years even for an innocent error, and 20 years for deliberate behaviour.
• Choosing the kindest behaviour label. HMRC tests the self-assessment of behaviour. GOV.UK warns that an inaccurate disclosure may lead to a civil or criminal investigation.
• Fixing only the UK side. A US person with undeclared UK-side problems often has US reporting gaps as well, such as FBARs. The IRS has its own route, covered in our guide to the streamlined filing procedures.
• Using it where fraud is involved. The Worldwide Disclosure Facility gives no protection from prosecution. HMRC's Contractual Disclosure Facility is the route for admitting tax fraud, and HMRC strongly recommends independent advice before using it.
• Correcting only future years. Starting to report US income from now on, without addressing earlier years, leaves the old liability in place and removes the argument that the eventual disclosure was unprompted and complete.

Getting a Worldwide Disclosure Facility submission right

A disclosure is made once and becomes a contract when HMRC accepts it. The quality of the first submission decides the penalty, and whether HMRC accepts the figures or opens an enquiry. For US income that means reconciling UK tax years to US calendar-year documents, converting dollars to pounds consistently, applying the treaty and the credit rules year by year, and judging behaviour honestly.

US/UK Cross Border Tax is a team of US CPAs and UK tax advisers working as one team, with offices in London, Manchester, New York and San Francisco. We prepare disclosures involving US income and assets, and deal with the matching US position at the same time, so that one correction does not create a second problem. Our tax controversy and HMRC disclosure service covers the Worldwide Disclosure Facility from notification to acceptance, and ongoing compliance afterwards runs through our UK Self Assessment service. To discuss your position in confidence, contact us.