HM Revenue & Customs (HMRC) has announced new penalties for offshore non-compliance.
These new penalties come into force from 6 April 2011 and apply to Income Tax and Capital Gains Tax. The first Self Assessment returns affected will be for the 2011-12 tax year, with paper returns due to be filed by 31 October 2012, and electronic returns by 31 January 2013.
The legislation can be found in Schedule 10 of Finance Act 2010.
The new penalty is an enhancement of the penalties for
Under the new legislation, these penalties will be linked to the tax transparency of the territory in which the income or gain arises. Where it is harder for HMRC to get information from another country, the penalties for failing to declare income or gains arising in that country will be higher.
There will be three new levels of penalty:
The Treasury has laid legislation before Parliament which describes which territories are in 'category 1' and 'category 3'. All other territories (except the UK) are in 'category 2'.
All existing safeguards will still apply. There will be no penalty if a person can demonstrate they have taken reasonable care to get their tax right or have a reasonable excuse for a failure to notify taxable income.
Where penalties are due, HMRC can reduce them depending on how helpful the individual is in assisting it to establish the correct amount of tax due. The largest reductions will be for unprompted disclosures. Unprompted means when you tell us about a tax issue you have no reason to believe we have discovered or are about to discover it.
Please contact us now if you need to get your tax affairs in order before these new penalties come into force.
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Offshore Penalty (PDF 83K) - simple summary
Inaccuracy penalty (PDF 95K) - simple summary
Failure to notify penalty (PDF 92 K) - simple summary
