Penalties for late filing ― offshore issues

Produced by Tolley

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

  • Penalties for late filing ― offshore issues
  • Offshore matters / transfers
  • Scope
  • Offshore matter
  • Offshore transfer
  • Categories
  • Territories
  • Quantum of penalty
  • Disclosure of additional information
  • Offshore asset moves
  • More...

Penalties for late filing ― offshore issues

Offshore matters / transfers

Penalties are levied where there is a failure to file on time for a return that involves an offshore matter or 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.


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

  1. the failure is deliberate, continues for 12 months after the due date for filing of the return and, because of the failure, HMRC is not able to accurately determine the taxpayer’s liability

  2. the return involves an ‘offshore matter’ or transfer (see below)

  3. the tax at stake is either income tax, capital gains or inheritance tax, and

  4. the inaccuracy is within either category 2 or category 3 (see below)

FA 2009, Sch 55, paras 6, 6AA, 6AB; SI 2016/456

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

Companies normally pay corporation tax instead of CGT. However, there are circumstances in which a company might be liable to CGT.

The penalties do not apply to non-resident CGT payable by companies but do apply if a company is otherwise liable to CGT. A company may also be liable to CGT if the chargeable gain accrues to the company in a fiduciary or representative capacity.

Offshore matter

An ‘offshore matter’ is one where the potential lost revenue (PLR) arises from:

  1. income arises 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

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