CH112210 - Offshore matters: failure to file on time penalties: definition of an offshore transfer

Schedule 20 to the Finance Act 2015 rendered certain failures previously falling outside of the offshore penalty regime subject to the regime if they met the requirements for involving an “offshore transfer”. The offshore transfer provisions were introduced to ensure that diverting income, disposal proceeds or assets offshore can be subject to higher offshore penalties.

A failure to file involves an offshore transfer if

• it does not involve an offshore matter
• by failing to make the return, a person deliberately withholds the information (whether or not the withholding of the information is concealed), and the tax at stake is income tax, capital gains tax or inheritance tax, and
• the applicable condition of Para 6AA is satisfied.

For income tax, the applicable condition is satisfied if the income, or any part of the income, to which tax is charged

• is received in a territory outside the UK, or
• is transferred before the relevant date to a territory outside the UK.

For capital gains tax, the applicable condition is satisfied if the proceeds or any part of the proceeds of the disposal to which tax is charged

• are received in a territory outside the UK, or
• are transferred before the relevant date to a territory outside the UK.

For inheritance tax, the applicable condition is satisfied if

• the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and
• after the disposition but before the relevant date the assets, or any part of the assets are transferred to a territory outside the UK.

The penalties and the penalty rates involving offshore transfers are the same as the penalties for offshore matters. 

For commencement dates for higher penalties relating to offshore transfers, see CH111200.  

<h4>FA2009 Sch 55 Para 6A
FA2009 Sch 55 Para 6AA
FA2015 Sch20 Para 17</h4>