Guidance

Automatic Exchange of Information obligations — CC/FS46

Published 14 April 2025

This factsheet gives you information about the penalties we may charge a financial institution for failure to comply with its Automatic Exchange of Information obligations under the International Tax Compliance Regulations 2015 (the Regulations) as amended.

When we may charge a penalty for failure to comply with the Regulations

A compliance failure penalty of £300 may be charged if a financial institution fails to comply with any obligation under regulations 2 to 11 or regulation 12G of the Regulations. This is a distinct penalty to the penalty for providing inaccurate information outlined below.

The regulations impose a number of obligations on the financial institutions. Such obligations include, but are not limited to, reporting, due diligence, and notification obligations.

The following includes examples of failing to comply with obligations which we may charge a penalty on. The examples are not an exhaustive list:

• failure to file complete returns on time
• failure to notify individual reportable persons under regulation 10 that their information will be reported and may be transferred to the government of another territory
• failure to provide an officer of Revenue and Customs with information in respect of your obligations under the Regulations as specified within 14 days following a written notice

A penalty may be charged for each compliance failure made by a financial institution. There can therefore be multiple failures subject to a penalty in a reporting period.

Example A

If a financial institution had to report one individual reportable person to HM Revenue and Customs but failed to notify this person on time they may be charged a compliance failure penalty of £300. If, in addition to its failure to notify the individual, the financial institution submitted the information after the 31 May deadline, the financial institution will be subject to an additional £300 penalty.

Example B

If the same failures in Example A were made but in respect of 2 reportable persons, then each obligation will have only been failed once, providing the behaviour which led to the failure was not deliberate. The financial institution may be charged one compliance failure penalty of £300 for failure to notify, and one compliance failure penalty for failure to submit the return by 31 May.

Daily default penalty

If the financial institution has still not complied with an obligation by the time we’ve issued the £300 penalty, we may then charge you daily penalties of up to £60 a day for each day that it does not comply with that obligation.

If after 30 days the financial institution has not complied with the obligation, an officer of HMRC may make an application to the tribunal for an increased daily penalty to be imposed on you. The tribunal may increase the daily penalty to £1,000 for each applicable day. An applicable day is the day on which the increased penalty will apply and each subsequent day. HMRC will notify the financial institution of the applicable day.

When we may charge an inaccuracy penalty

An inaccuracy penalty of up to £3,000 may be charged if:

• in complying with their reporting obligation at regulation 6 of the Regulations, a financial institution provides inaccurate information
• condition A, B or C is met

Condition A is that the inaccuracy is due to a failure to comply with the due diligence requirements or deliberate on the part of the person.

Condition B is met if the financial institution knows of the inaccuracy at the time the information is provided but does not inform HMRC at that time.

Condition C is met if the financial institution discovers the inaccuracy some time later and fails to take reasonable steps to inform HMRC.

An inaccuracy penalty may be charged for each inaccurate provision of information. Therefore, in each reporting period, more than one inaccuracy penalty may be charged.

Example

The financial institution may be charged 2 inaccuracy penalties if it provides inaccurate information because it failed in its due diligence requirements by:

• failing to obtain self-certifications from new individual account holders
• failing to conduct a paper record search of pre-existing high value individual accounts where required

However, the same error leading to multiple inaccuracies in the information provided will only be subject to one inaccuracy penalty in any reporting period, providing the inaccuracy is not deliberately made.

How we reduce the amount of inaccuracy penalty we may charge

The maximum inaccuracy penalty for each inaccuracy is £3,000. An HMRC officer will determine the penalty amount having taking into consideration factors which could mitigate the maximum.

Factors which HMRC will take into consideration in determining the amount of the inaccuracy penalty include:

• whether the financial institution disclosed the inaccuracy to HMRC
• the level of cooperation in identifying the inaccuracy
• the behaviour which led to the inaccuracy
• the scale of the inaccuracy
• whether the inaccuracy affects more than one reporting year
• whether the inaccuracy is corrected in a timely manner

How we tell you about a penalty

We’ll write to you to tell you how much the penalty is and how we’ve worked it out. If there’s anything about the penalty that you do not agree with, or if you think there’s any information we have not already taken into account, you should tell us straightaway.

After taking account of anything you’ve told us, we’ll send you a penalty assessment notice.

What to do if you disagree

If there’s something that you do not agree with, you should tell us.

If we charge a compliance failure penalty or an inaccuracy penalty you may appeal in writing to HMRC within 30 days from the date the notification of a penalty is given. Your appeal must state the grounds of appeal.

Your rights when we are considering penalties

The European Convention on Human Rights gives you certain rights when we’re considering certain types of penalties. These rights mean that:

• if we ask you any questions to help us decide whether to charge you a penalty, you have the right not to answer them
• the amount of help that you give us when we’re considering penalties is entirely a matter for you to decide
• when deciding whether to answer our questions, you may want to get advice from a professional adviser – particularly if you do not already have one
• if you disagree with us about any penalties we believe are due, you can appeal
• you’re entitled to have the matter of penalties dealt with without unreasonable delay
• you also may be able to apply for funded legal assistance for dealing with any appeal against certain penalties

Although these rights do not apply to all of these penalties, we’ll treat them all procedurally as if they do. 

What happens if you give us information that you know to be untrue

If you:

• give us information that you know to be untrue, whether verbally or in a document
• dishonestly declare the wrong amount of duty or claim payments to which you are not entitled

We may carry out a criminal investigation and you may be prosecuted.

More information

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you.