CH114500 - Offshore matters: failure to notify penalties: deciding category a failure falls into

Exceptionally, a failure to notify may fall into more than one category. This can only happen where the offshore matter, see CH114200, relates to more than one territory and the different territories are in different categories, see CH114300.

If the failure falls into more than one category

• treat the failure as if it were separate failures,
• place each of these separate failures in one of the categories according to the territory that it involves, and
• share the potential lost revenue between the separate failures in a just and reasonable way.

For example, Hugh fails to notify involves interest arising on two overseas bank accounts, one in territory A and the other in territory B. But territory A is in category 1 while territory B is in category 3. So you should take the following action

• Treat the failure as if it were two failures, one for territory A and the other for territory B.
• Place the failure for territory A in category 1 and the failure for territory B in category 3.
• Share the potential lost revenue for the overall failure to notify between each of the two failures. You will need to look at the facts of the situation to do this in a just and reasonable way.

For example, where

• Hugh fails to notify overseas interest of £1,000 in territory A (category 1) and £4,000 in territory B (category 3), and
• the total of £5,000 takes Hugh into the higher rate band by £2,000.

Note: it is appropriate to calculate the total potential lost revenue (at both basic and higher rates) and then apportion it 1:4 between the categories in order to apply the penalty loading.