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HMRC internal manual

Compliance Handbook

Offshore matters: inaccuracies penalties: overview

CH82470 sets out the maximum and minimum penalty percentages that normally apply for inaccuracies. Higher maximum and minimum penalty percentages apply where

  • the inaccuracy involves an offshore matter, see CH116200, and
  • the tax involved is income tax, capital gains tax or inheritance tax, and
  • the inaccuracy is in category 2 or 3, see CH116300, and
  • the penalty is for an inaccuracy in a return or other document (FA07/SCH24/PARA1, see CH81110).

The higher penalty percentages for offshore matters do not apply to penalties for

  • deliberately supplying false information to or deliberately withholding information from another person (FA07/SCH24/PARA1A, see CH81165), or
  • failing to take reasonable steps to notify HMRC of an under-assessment (FA07/SCH24/PARA2, see CH81170).

The law describes three categories of inaccuracy. CH116300 explains these in detail.

Normally it will be straightforward to decide which category an inaccuracy falls within, but sometimes an inaccuracy may fall within more than one category, see CH116500. If it does, we treat it as if it were separate inaccuracies, one in each relevant category. We calculate the potential lost revenue for each of these separate inaccuracies separately and calculate the appropriate penalty for each.

Normally, where we impose a penalty on both a person (P) and another person (T) in respect of the same inaccuracy, see CH81075, the aggregate amount of the penalties must not exceed 100% of the potential lost revenue, see CH84974. However, if the inaccuracy in P’s return or other document falls within category 2 or 3 the aggregate amount of the penalties may be higher, see CH116800.

CH116600 and CH116700 set out the higher maximum and minimum penalty percentages for offshore matters.