HM Revenue & Customs (HMRC) applies a higher level of penalties for offshore non-compliance. These apply to Income Tax and Capital Gains Tax. They affect Self Assessment returns for the 2011-12 tax year, and later years.
The penalties are an extension of the standard penalties for
These penalties are 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 are higher.
The legislation (in Schedule 10 of Finance Act 2010) lists which territories are in 'category 1' and 'category 3'. All other territories (except the UK) are in 'category 2'.
There are three levels of penalty:
All the usual safeguards, including a right of appeal, apply. There is no penalty if you can show you have taken reasonable care to get your tax right. You will not receive a penalty if you have a reasonable excuse for:
If you do owe penalties, HMRC can reduce them depending on how much help you give them to establish the correct amount of tax due. HMRC give the largest reductions for unprompted disclosures. Unprompted means you tell HMRC about a tax issue when you have no reason to believe they have discovered or are about to discover it.
Please contact HMRC now if you need to get your tax affairs in order.
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