Penalties for offshore matters

From 6 April 2011, increased penalties are levied where a failure to notify, failure to file a return or an inaccuracy within a return involves an offshore matter.

Under these new rules the maximum penalty can be up to 200% of the tax at stake depending on a number of criteria.

This guidance note deals with the background to the penalty regime for offshore matters and is split into separate sections depending on the type of penalty.

If you were to read this guidance note as a whole, the text would appear repetitive. This is because the rules on penalties for offshore matters are consistent irrespective of the type of penalty. However, given that advisers may need to look at the rules on offshore matters for each type of penalty independent of the others, it is felt that this is the best way of presenting this information.

Offshore matters are becoming increasingly easy for HMRC to track with the signing of a large number of tax information and exchange agreements with a number of tax havens.

This guidance note discusses the rules currently in force. For future changes, both those on the statute books but not in force and those expected to be legislated, see the end of this guidance note.

The general rules on penalties for failure to notify are covered in the Penalties for failure to notify and Penalty reductions for failure to notify guidance notes. The first note also contains a discussion on the meaning of potential lost revenue (PLR) in relation to failure to notify.