CH123405 - Offshore matters: requirement to correct certain offshore tax non-compliance: failure to correct - penalties - amount of the penalty
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH123050 for full details.
To work out the penalty to be charged you will need to establish
- the Potential Lost Revenue (PLR), see CH123450
- whether the taxpayer came forward voluntarily to make the disclosure, see CH123406
- the quality of disclosure, see CH123407.
For guidance on how to calculate the penalty, see CH401295.
The amount of the penalty is based on the Potential Lost Revenue (PLR), see CH123450. You should work out the amount of the penalty by applying the appropriate penalty percentage to the PLR. This will depend on whether the taxpayer came forward voluntarily, see CH123406.
Standard penalty
The standard penalty for a failure to correct offence is 200% of the PLR
The following table shows the standard maximum and the minimum penalties
| Type of disclosure | Voluntary | Non-voluntary |
|---|---|---|
| Maximum penalty | 200% | 200% |
| Minimum penalty | 100% | 150% |
You may reduce the penalty depending on the quality of the disclosure, see CH82431. The reduction may not reduce the penalty below 100% (or 150% if the disclosure is not voluntary).
For example, for a non-voluntary disclosure, see CH123406, the maximum penalty is 200% and the minimum penalty is 150%. The extent of the quality of disclosure reduction, see CH123407, gives the point between the maximum 200% and the minimum 150% at which the penalty lies.
When calculating the penalty the formula, see CH82510, is the same as for penalties under FA07/SCH 24, but bear in mind that the maximum and minimum penalties, as explained above, are different.
When processing multiple penalties, it may be possible to group them. The principles that apply for grouping penalties under FA07/SCH 24, see CH82200, apply to grouping FTC penalties.
Amount of the penalty
The amount of penalty is calculated as a percentage of the Potential Lost Revenue (PLR), see CH123450.
The maximum percentage in all cases is 200%.
The maximum percentage may be reduced depending on the quality of the disclosure.
A person makes a disclosure by
- telling HMRC about it (telling), see CH123408
- giving HMRC reasonable help in quantifying the amount of the inaccuracy or under-assessment (helping), see CH123409
- informing HMRC of any person who acted as an enabler of the relevant offshore non-compliance and
- allowing HMRC access to records for the purpose of ensuring that the inaccuracy or under-assessment is fully corrected (giving access), see CH123410.
The penalty percentage cannot normally be reduced below 100%. In practice the minimum penalty percentage is dependent upon whether the disclosure was made voluntarily or was non-voluntary, see CH123406.
This reduction of the maximum penalty applies to all failures to correct offshore tax non-compliance by 30 September 2018.