CH403145 - Charging penalties: calculating penalties: offshore matters: territory categories

Offshore territories are categorised according to how readily they share information with HMRC.

Category 1 territories have agreed to exchange tax information automatically with the UK. The maximum penalty can be 100% of the potential lost revenue (PLR) or liability to tax (LTT). The UK falls into category 1.

Category 2 territories have agreed to exchange tax information with the UK on request. The maximum penalty can be 150% of the potential lost revenue (PLR) or liability to tax (LTT).

Category 3 territories have not agreed to share any tax information with the UK. The maximum penalty can be 200% of the potential lost revenue (PLR) or liability to tax (LTT).

The Treasury decides which category a territory falls into. They are specified by Treasury Order.

For guidance about what is an offshore matter for

• inaccuracies, see CH116200
• failures to notify, see CH114200
• failures to file on time, see CH112200.

When you identify a penalty risk that involves an offshore matter you must find the territory in which the offshore matter occurred, and then check the category lists at CH403147 to find out which category the territory falls into. If a territory is not listed in category 1 or category 3 it falls into category 2.

Territories can move from one category to another, so you must always check to make sure you identify the correct category that an overseas territory was in at the date

• when the person gave the inaccurate return or other document to HMRC
• on which the person failed to notify HMRC
• that the person became liable to the 12 month further penalty in failure to file cases.

For an example, see CH403149.