The tax representative and the overseas insurer are jointly and
severally liable for penalties if the tax representative fails to
comply with the requirement to issue a chargeable event certificate
or is negligent in issuing an incorrect certificate. The penalties
are the same as those applying to a UK insurer that fails to comply
fully with the requirements of
ICTA88/S552.
The penalties that may be imposed are listed in
TMA70/S98. There is a maximum initial penalty of
£300 for a failure to deliver a certificate and a maximum
continuing penalty of £60 per day for each day that the
failure continues after the initial penalty has been imposed. There
is a maximum penalty of £3,000 where the insurer has issued an
incorrect certificate through negligence on its part.
HMRC has the power to audit a tax representative to ensure that
the tax representative and the overseas insurer are administering
the reporting regime fully and correctly. Although the tax
representative is responsible for issuing correct chargeable event
certificates to policyholders and HMRC, it is not required to
maintain the underlying records. The overseas insurer would
normally be responsible for that.
In the event of an audit, the tax representative is required
to make available any books, documents, records and information
that is needed in order for the auditors to check that the tax
representative is carrying out its reporting duties properly. When
setting the timetable for an examination of the records the auditor
would take into consideration that they are likely to be maintained
elsewhere and would need to be transferred or sent to the
representative.
As part of the audit the tax representative would also have
to make available all internal guidance notes of the overseas
insurer relating to chargeable events for its systems, both
computerised and manual.
| Further reference and feedback | IPTM1013 |
