CH122120 - Offshore matters: asset-based penalties: definitions: standard offshore tax penalty - failure to correct penalty

If HMRC charge a standard offshore tax penalty, the person may also be liable to an asset-based penalty.

A ‘standard offshore tax penalty’ is a penalty that has been imposed for a deliberate failure or inaccuracy and falls within:

• Schedule 24 FA 2007 paragraph 1 - Inaccuracy in taxpayer’s document, where the tax at stake is (or includes) capital gains tax, inheritance tax, or asset-based income tax.
• Schedule 41 FA 2008 paragraph 1 – Failure to notify, where the tax at stake is, or includes, capital gains tax, or asset-based income tax.
• Schedule 55 FA 2009 paragraph 6 – Penalty for failure to make a return more than 12 months after the filing date, where the tax at stake is, or includes, capital gains tax, inheritance tax, or asset-based income tax.

When we charge a failure to correct penalty, the person may also be liable to an asset-based penalty. Such a penalty can also be a ‘standard offshore tax penalty’.

A failure to correct penalty is a penalty that has been imposed for a failure to correct offshore tax non-compliance and falls within:

• Schedule 18 FA (No 2) 2017 paragraph 1 – Failure to correct relevant offshore tax non-compliance, see CH123050+.

If the underlying penalty was based on both an offshore matter or transfer, and a domestic matter, the standard offshore tax penalty is only that part of the penalty that involves the offshore matter or offshore transfer.

Details on how this calculation should be carried out are at CH122170.

If the tax at stake used to calculate the underlying penalty includes tax other than capital gains tax, inheritance tax, or asset-based income tax, the standard offshore tax penalty is only that part of the penalty which relates to capital gains tax, inheritance tax or asset-based income tax.

Asset-based income tax means income tax that is charged under any of the provisions mentioned in FA 2016 Sch 22 paragraph 13(2) see, CH122120.