Penalties for offshore tax evasion
- 24th January 2018
- Posted by: admin
- Category: News
Taxpayers face higher penalties for evading income tax and capital gains tax relating to offshore matters. The penalty regime came into force for tax periods commencing on or after 1 April 2011, and introduced larger penalties for taxpayers who fail to provide
a full account of their income tax or capital gains tax liabilities where the failure is linked to an offshore matter.
The penalty regime is linked to the tax transparency of the territory in which the income or gain arises. There are three separate categories which correspond to the three penalty levels:
- Where the income or gain arises in a territory in ‘category 1’, the maximum penalty rate is 100% of the tax. These are territories that have agreed to exchange information automatically with the UK.
- Where the income or gain arises in a territory in ‘category 2’, the maximum penalty rate is 150% of the tax. These are territories that have agreed to exchange information with the UK but only when asked.
- Where the income or gain arises in a territory in ‘category 3’, the maximum penalty rate is 200% of the tax. These are territories that have not agreed to exchange information with the UK.
A breakdown of territories and their categories can be found on the GOV.UK website. In certain circumstances, HMRC may reduce the amount of penalties due. The largest reductions are for unprompted disclosures. The penalty also varies depending on whether
the errors are careless, non-deliberate, deliberate or deliberate and concealed.
HMRC’s compliance check notice entitled Higher penalties for offshore matters has been updated to clarify when an offshore transfer takes place, and the penalty percentage for failure to notify for income tax and capital gains tax has been updated.
Source: New feed