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HMRC internal manual

Compliance Handbook

Offshore matters: failure to notify penalties: categories of failure

Amount of penalties involving an offshore matter or offshore transfer

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 an offshore matter or transfer in a category 1 territory, and
  • the tax at stake is income tax or capital gains tax.

Please note that for periods from 2016-17 onwards Category 1 penalty ranges are different from penalty ranges for onshore matters and for taxes other than income tax or capital gains tax.

For Category 1 penalty ranges up to and including 2015-16 see CH72540

For Category 1 penalty ranges for periods commencing 2016-17 and for later periods, see CH114600.

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 CH114600.

FA08/SCH41/PARA6A