Penalties for offshore asset moves

Produced by Tolley

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

  • Penalties for offshore asset moves
  • Scope of the regime
  • Meaning of relevant offshore asset move
  • Amount of the penalty
  • Appealing the penalty

Penalties for offshore asset moves

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 tax residence. The additional penalty is calculated as a percentage of the original penalty, rather than the tax at stake. The additional penalty is fixed at 50% of the original penalty; it cannot be reduced based on disclosure or help given to HMRC by the taxpayer.

Scope of the regime

To be charged an offshore asset move penalty:

  1. •

    the taxpayer must have been charged an ‘original penalty’ (see below)

  2. •

    the underlying behaviour which led to the original penalty must have been ‘deliberate’, whether or not it is also concealed (see below)

  3. •

    there must have been a ’relevant offshore asset move’ after the tax liability arose (known as the ‘relevant time’). Both of these terms are explained under ‘Meaning of relevant offshore asset move’ below)

  4. •

    the main reason, or one of the main reasons, behind the relevant offshore asset move is to prevent or delay HMRC from becoming aware

There’s no margin for error.
Think Tax.
Think Tolley.
TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.
Take a free trial
Popular documents
LEXISNEXIS

Calculating QIPs

This note provides details on how to calculate quarterly instalment payments (QIPs) for large and very large companies.The instalment amounts are based on the estimated corporation tax liability of the company’s current accounting period. Therefore, this means that large and very large companies

LEXISNEXIS

Trustees’ powers and duties

This guidance note provides an outline of the main trustee powers and duties. Although there is a degree of overlap between them, the term ‘powers’ usually refers to discretionary or optional actions which the trustees may take for the purpose of maintaining the trust and supporting beneficiaries.

LEXISNEXIS

Loans written off

Companies sometimes provide directors, employees or shareholders with low interest (or interest-free) loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed in detail in

LEXISNEXIS

Statutory sick pay (SSP)

Statutory sick pay (SSP)Statutory sick pay has its origins in the Social Security and Housing Benefits Act 1982, Part 1. Various amendments have been made to this Act to give us the SSP system we now operate.Temporary changes to SSP for coronavirus (COVID-19)New legislation has been put in place in