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HMRC internal manual

Compliance Handbook

Offshore matters: inaccuracies penalties: categories of inaccuracies

Amount of penalties involving an offshore matter or offshore transfer

There are three categories of inaccuracy that determine the level of the maximum and minimum penalties. An offshore matter, see CH116200, can fall into any one category or even into more than one category.

To decide which category an inaccuracy falls into you need to know the territory in which the offshore matter occurred. CH116400 explains how territories are allocated to the different categories. See CH116500 for examples of how to decide which category an inaccuracy falls into.

Category 1

An inaccuracy 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, capital gains tax or inheritance 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, capital gains tax or inheritance tax.

For Category 1 penalty ranges up to and including 2015-2016 see CH82470. 

For Category 1 penalty ranges for periods commencing 2016-17 and for later periods, see CH116600.

The standard maximum and minimum penalty percentages apply for this type of inaccuracy, see CH82470.

Category 2

An inaccuracy is in category 2 if

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

There are higher maximum and minimum penalty percentages for inaccuracies in category 2 and category 3. The percentages for category 2 are at CH116600.

Category 3

An inaccuracy is in category 3 if

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

There are higher maximum and minimum penalty percentages for inaccuracies in category 2 and category 3. The percentages for category 3 are at CH116600.

FA07/SCH24/PARA4A