CH123400 - Offshore matters: requirement to correct certain offshore tax non-compliance: failure to correct - penalties - introduction
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH123050 for full details.
If the customer fails to correct their position on or before 30 September 2018, they will be liable to a failure to correct penalty unless they can demonstrate that they had a ‘reasonable excuse’ for not doing so, see CH123300.
Standard penalties
In all cases where a penalty applies, there will be a standard penalty equivalent to 200% of the tax liability which should have been disclosed. This penalty can be reduced but cannot be lower than 100%, unless special circumstances apply, see CH123350.
Penalty reductions
You may reduce the penalty depending on the quality of the disclosure with regard to
- Telling.
- Helping.
- Informing HMRC of anyone who acted as an enabler of the relevant offshore tax non-compliance or the failure to correct it.
- Allowing access to records for the purpose of resolving the matter.
Who is an enabler?
An enabler is someone who has encouraged, assisted or otherwise facilitated conduct by a person that constitutes offshore tax evasion or non-compliance, see CH124000+.
For detailed guidance on penalty reductions and how to calculate standard penalties see CH123405+.
Additional penalties
Asset based penalties
Where the offshore non-compliance PLR exceeds £25,000 in any tax year and there has been a failure to correct that offshore tax non-compliance, then an asset based penalty under Schedule 22 Finance Act 2016 may apply, see CH122000.
The asset based penalty is in addition to the FTC penalty and is the lower of 10% of the value of assets, or the offshore potential lost revenue (PLR) multiplied by 10, see CH122500.
The asset based penalty will only apply if the person ‘P’ was aware at any time during the RTC period (6 April 2017 to 30 September 2018) that at the end of the 2016-17 tax year they had relevant offshore tax non-compliance to correct.
Offshore asset moves penalty
Schedule 21 Finance Act 2015 introduced a new enhanced penalty for cases where it can be shown that a person has transferred assets between countries to prevent or delay the discovery by HMRC of a PLR.
This penalty is in addition to the FTC penalty and is equivalent to a further 50% of the amount of the FTC penalty.
The offshore asset moves penalty will only apply if the person was aware at any time during the RTC period (6 April 2017 to 30 September 2018) that at the end of the 2016-17 tax year they had relevant offshore tax non-compliance to correct.
For further guidance on the offshore asset moves penalties, see CH119000.
Publishing details of defaulters
In addition to the penalties detailed above, if the offshore non-compliance PLR is either
- more than £25,000, or
- less than £25,000 but there are 5 or more penalties under Schedule 18 F(No.2)A 2017
and the person was aware that they had offshore tax non-compliance during the requirement to correct period but failed to correct this, then HMRC may publish that person’s details, see CH123425.