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HMRC internal manual

Compliance Handbook

Offshore matters: failure to notify penalties: categories of failure

There are three categories of failure to notify that determine the level of the maximum and minimum penalties. An offshore matter, see CH114200, can fall into any one category or even into more than one category. To decide which category a failure falls into you need to know the territory in which the offshore matter occurred. CH114400 explains how territories are allocated to the different categories. See CH114500 for examples of how to decide which category a failure falls into.

Category 1

A failure to notify is in category 1 if it involves

  • a domestic matter (anything that is not an offshore matter), or
  • an offshore matter and
  • the offshore matter is in a category 1 territory, or
  • the tax at stake is not income tax or capital gains tax.

Most failures to notify will fall into category 1. The standard maximum and minimum penalty percentages apply for this type of failure, see CH73200.

Category 2

A failure to notify is in category 2 if

  • it involves an offshore matter in a category 2 territory, and
  • the tax at stake is income tax or capital gains tax.

There are higher maximum and minimum penalty percentages for failures to notify in category 2 and category 3. The percentages for category 2 can be found at CH114600.

Category 3

A failure to notify is in category 3 if

  • it involves an offshore matter in a category 3 territory, and
  • the tax at stake is income tax or capital gains tax.

There are higher maximum and minimum penalty percentages for failures to notify in category 2 and category 3. The percentages for category 3 can be found at CH114700.

FA08/SCH41/PARA6A