For over 30 years Richard Edwards Group LLP has been providing excellent advice and a first class service to our clients. We have a large portfolio of clients and service businesses across many sectors. Book one of our FREE INITIAL MEETINGS to start benefiting from our expertise today.

High penalties for offshore tax evasion

Source: HM Revenue & Customs | | 02/10/2018

There are higher penalties for taxpayers evading Income Tax and Capital Gains Tax relating to offshore matters. HMRC’s compliance check notice entitled Higher penalties for offshore matters, has recently been updated to include details about penalties under the Requirement to Correct (RTC) legislation.

The RTC rules apply to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers relating to offshore tax non-compliance committed before 6 April 2017 (i.e. up to and including the 2015-16 tax year). With effect from 1 October 2018, any new disclosure relating to this (pre-6 April 2017) period will be subject to the new failure to correct (FTC) penalties. The FTC standard penalty will start at 200% of any tax liability not disclosed under the RTC, and cannot be reduced to less than 100% even with mitigation.

The existing penalty regime for other offshore matters remains as before, and is linked to the tax transparency of the territory in which the income or gain arises. There are three separate categories which correspond to the three penalty levels:

  • Where the income or gain arises in a territory in 'category 1', the maximum penalty rate is 100% of the tax. These are territories that have agreed to exchange information automatically with the UK.
  • Where the income or gain arises in a territory in 'category 2', the maximum penalty rate is 150% of the tax. These are territories that have agreed to exchange information with the UK but only when asked.
  • Where the income or gain arises in a territory in 'category 3', the maximum penalty rate is 200% of the tax. These are territories that have not agreed to exchange information with the UK.

A breakdown of which territory is in which category can be found on the GOV.UK website. In certain circumstances, HMRC may reduce the amount of penalties due. The largest reductions are for unprompted disclosures. The penalty levied can also vary depending on whether the errors are careless, non-deliberate, deliberate or deliberate and concealed.



 

Latest News

Anti-money laundering rules
17/10/2018 - More...
The Money Laundering Regulations (MLR) are designed to protect the UK financial system and put in place certain controls to prevent businesses being used for money laundering by

New style £50 note to be introduced
17/10/2018 - More...
In a joint statement issued by HM Treasury and the Bank of England it had been confirmed that the £50 note is to continue to be part of the UK currency. The new £50 note will be


Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login