Increased penalties can be levied where a failure to notify, failure to file a return or an inaccuracy within a return involves an ‘offshore matter’ or ‘offshore transfer’. The maximum penalty under these rules is 200% of the tax at stake, with the specific penalty charged depending on the territory in which the income or gains arise. The categorisation of the territory depends on the transparency of the jurisdiction and the extent to which is shares information with HMRC, whether automatically or otherwise. See the Penalties for offshore matters and offshore transfers guidance note.

However, the Government felt that these rules did not sufficiently penalise taxpayers who moved their underlying assets from one territory in order to stay one step ahead of the international tax transparency agenda.

Following a consultation in 2014, legislation was introduced with effect from 27 March 2015 to introduce an additional penalty, on top of the penalty charged for the offshore matter, where the underlying assets had been moved or the taxpayer with beneficial ownership of the asset had changed his