Offshore issues

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Offshore issues
  • Offshore matters / transfers
  • Offshore asset moves
  • Asset-based penalties
  • Tax-geared penalties for ‘enablers’
  • Requirement to correct (RTC)

Offshore matters / transfers

From 6 April 2011, increased penalties are levied where a penalty for failure to notify a liability involves an offshore matter or (from 1 April 2016) an offshore transfer. Under these rules the maximum penalty can be up to 200% of the tax at stake depending on a number of criteria. Full details are in Simon’s Taxes A4.575A (subscription sensitive).


The rules in relation penalties for failure to notify a liability which involve offshore matters or transfers only apply when all of the following criteria are met:

  • the failure to notify involves an ‘offshore matter’ or transfer (see below)
  • the tax at stake is either income tax, capital gains or (from 1 April 2016) inheritance tax, and
  • the failure to notify is within either category 2 or category 3 (see below)

FA 2008, Sch 41, paras 6–6A; SI 2016/456 (subscription sensitive); CH114100

Therefore, these increased penalties can be levied on individuals (including those who are self-employed or in partnership), trustees and personal representatives who fail to notify their liability to tax, as these are the people who are liable to income tax, capital gains tax and inheritance tax.

Offshore matter

An ‘offshore matter’ is one where the PLR arises from:

  • 1)income arising from a source which is in a territory outside the UK
  • 2)assets situated or held in a territory outside the UK (assets takes the definition in TCGA 1992, s 21(1) but also includes sterling)
  • 3)activities carried on wholly or mainly in a territory outside the UK, or
  • 4)anything having an effect as

More on Penalties for failure to notify: