CH119100 - Offshore matters: asset moves penalties: overview

This guidance covers penalties under Schedule 21 FA 2015. These are known as offshore asset moves penalties. These penalties are additional penalties to be charged in cases of serious non-compliance involving an offshore matter or offshore transfer. A person is liable to these penalties where certain conditions have been met and they have already been charged a penalty for an inaccuracy or failure under:

  • Schedule 55 FA 2009,
  • Schedule 41 FA 2008,
  • Schedule 24 FA 2007,
  • Schedule 18 FA (No 2) 2017.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

A person may be liable to an offshore asset move penalty if all of the following conditions apply for either the inaccuracy or failure.

Failure to file on time

  • The person is liable to a penalty for deliberate withholding of information by failing to make a return or another document under Schedule 55 FA 2009 - this is the underlying penalty.
  • The tax at stake in relation to the underlying penalty is income tax, capital gains tax and inheritance tax.
  • There is a relevant offshore asset move connected with the failure that led to the underlying penalty.
  • The relevant offshore asset move occurred after 26 March 2015.
  • The relevant offshore asset move occurred after the relevant time.
  • The main purpose or one of the main purposes of moving the asset to another territory was to prevent or delay discovery by HMRC of the failure that led to the underlying penalty.

For income tax or capital gains tax, in relation to a penalty for failure to make a return under Schedule 55 FA 2009, the relevant time is the start of the tax year to which the return relates.

Failure to notify

  • The person is liable to a penalty for a failure to notify under Schedule 41 FA 2008 - this is the underlying penalty.
  • The failure was deliberate ( whether or not concealed)
  • The tax at stake in relation to the underlying penalty is income tax or capital gains tax.
  • There is a relevant offshore asset move connected with the failure that led to the underlying penalty.
  • The relevant offshore asset move occurred after 26 March 2015.
  • The relevant offshore asset move occurred after the relevant time.
  • The main purpose or one of the main purposes of moving the asset to another territory was to prevent or delay discovery by HMRC of the failure that led to the underlying penalty.

For income tax or capital gains tax in relation to a penalty for failure to notify under Schedule 41 FA 2008, the relevant time is the start of the tax year to which the obligation to notify relates.

Inaccuracies

  • The person is liable to a penalty for an inaccuracy under Schedule 24 FA 2007 - this is the underlying penalty.
  • The tax at stake in relation to the underlying penalty is income tax, capital gains tax or inheritance tax.
  • The inaccuracy was deliberate on the person’s part (whether or not concealed).
  • There is a relevant offshore asset move connected with the inaccuracy that led to the underlying penalty.
  • The relevant offshore asset move occurred after 26 March 2015.
  • The relevant offshore asset move occurred after the relevant time.
  • The main purpose or one of the main purposes of moving the asset to another territory was to prevent or delay discovery by HMRC of the inaccuracy that led to the underlying penalty.

For income tax or capital gains in relation to an inaccuracy penalty under Schedule 24 FA 2007, the relevant time is the beginning of the tax year in respect of which a penalty was charged for an inaccuracy. For inheritance tax, the relevant time is the time when the liability for the tax at stake first arises.

Failure to correct

  • The person is liable to a penalty under Schedule 18 FA (No 2) 2017, where they had relevant offshore tax non-compliance to correct at the end of the 2016-17 tax year,

     And

  • They failed to correct the relevant offshore tax non-compliance within the period beginning with 6 April 2017 and ending on 30 September 2018 (the RTC period).
  • The person was aware at any time during the RTC period that at the end of the 2016-17 tax year they had relevant offshore tax non-compliance to correct.
  • There is a relevant offshore asset move connected with the relevant tax non-compliance.
  • The relevant offshore asset move occurred after the relevant time, which is 16 November 2017.

Inaccuracy example

Pete receives bank interest in a specified country and deliberately omits this income from his 2016-17 and 2017-18 tax returns. In 2018-19 he moves the capital to a bank in a non-specified country so that a relevant offshore asset move has occurred. He again deliberately omits the rental income from his 2018-19 tax return. On 4 March 2020, HMRC discover the inaccuracy and charge penalties under schedule 24 for all 3 years 2016-17 to 2018-19. As the main purpose or one of the main purposes of moving the asset to another territory was to prevent or delay discovery by HMRC of the inaccuracy that led to the underlying penalty and all the other bullet points above have been met, then Pete is liable to an asset move penalty for all three years of 50% of the amount of each relevant penalty.

An asset move penalty would also have been the case if the undeclared income had been letting income from a holiday cottage in a specified country which is then sold and the proceeds used to purchase another holiday cottage in a non-specified country. Any second or later asset purchased with the proceeds of the sale of the original asset is treated as the original asset when determining whether a relevant offshore asset move has occurred.

Amount of the penalty

The offshore asset move penalty is 50 per cent of the amount of the underlying penalty and is in addition to that underlying penalty.

Relevant offshore asset move

A relevant offshore asset move occurs if an asset or a person who holds an asset moves from a specified to a non-specified territory, or if there is a change in the ownership arrangements of an asset which results in the beneficial owner prior to the move remaining the beneficial owner afterwards.

Any second or later asset purchased with proceeds of sale from the original asset is treated as the original asset when determining whether a relevant offshore asset move has occurred.

The specified territories are set out in The Offshore Asset Moves (Specified Territories) Regulations 2015 (S.I. 2015/866).

Eight new specified territories were added and two removed by The Offshore Asset Moves Penalty (Specified Territories) (Amendment) Regulations 2017 (S.I. 2017/989).  

Seventeen new specified territories were added and three removed by The Offshore Asset Moves Penalty (Specified Territories) (Amendment) Regulations 2024 (SI 2024/1195)

Any territories not specified in the Statutory Instrument are non-specified territories.

Legislation and commencement date

The legislation for asset move penalties is in Schedule 21 FA 2015, it applies to relevant asset moves that take place after 26 March 2015.

The eight new specified territories and two that ceased to be specified territories apply only to relevant asset moves that take place after 3 November 2017. Albania and United States of America were specified territories from 27 March 2015 until 2 November 2017.

Seventeen new specified territories and three that ceased to be specified territories apply only to relevant asset moves that take place after 12 December 2024. Bonaire, St Eustice and Saba (public bodies of the Netherlands), Russia, and Trinidad and Tobago were specified territories from 27 March 2015 until December 11 November 2024.