Commentary

A4.575D Penalty for failure to correct offshore tax non-compliance

Administration and compliance

A4.575D Penalty for failure to correct offshore tax non-compliance

A4.575D Penalty for failure to correct offshore tax non-compliance

A penalty is payable by a person who has any previously-undeclared UK tax liabilities relating to offshore interests, termed 'relevant offshore tax non-compliance', at the end of tax year 2016/17 and who 'fails to correct' it within the 'requirement to correct' (RTC) period which ran from 6 April 2017 to 30 September 2018. The end of this period coincides with the date on which all signatory countries to the Common Reporting Standard will begin to exchange data (and which will enable HMRC more easily to pursue those who have not complied) (see A6.1206)1.

These provisions do not distinguish between careless and deliberate behaviour, and whilst no penalty may be charged where the person has a reasonable excuse, the provisions for reasonable excuse exclude various situations where professional advice was followed, as detailed below. The requirement to correct offers taxpayers the chance to review and update their offshore interests and correct any UK tax irregularities by disclosing relevant information to HMRC about non-compliance in respect of income tax, capital gains tax (with the exception of CGT payable before 6 April 2019 by companies in respect of NRCGT gains2) and inheritance tax.

A person has 'relevant offshore tax non-compliance' where they have offshore tax non-compliance which:

  1.  

    (a)     has not been fully corrected before 5 April 2017 and which involved loss of tax at the time it was committed (the original non-compliance); and

  2.  

    (b)     at the relevant time (6 April 2017 for income tax and capital

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