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HMRC internal manual

Compliance Handbook

Offshore matters: additional information: examples of additional information

The examples here relate just to the additional information provided. For guidance on calculating offshore penalties, see CH100000.

Example 1

In 2017 Q diverted income offshore via a series of trusts. In 2018 HMRC commenced enquiries into Q’s affairs which were focused on his offshore income.

Q’s co-operation throughout the enquiry was poor and disclosure was partial, piecemeal and slow. Following a long enquiry during which HMRC were forced to use information powers, Q eventually provided the information that HMRC needed to quantify the additional liabilities, however, Q refused to answer any questions about whether he had been advised to divert his income offshore. He also refused to provide any information about whether or not he had been assisted by an enabler, or details of who held assets on his behalf outside the UK.

When calculating the penalty reduction the caseworker made the following recommendations that were accepted.

Telling

Following substantial delay Q eventually provided all of the required information to enable his liabilities to be correctly calculated, however, this was only after he had been compelled to do so by HMRC’s use of information powers. He refused to supply any additional information about any enabler or assets held on his behalf outside the UK which was taken into consideration when calculating the reduction for the quality of disclosure.

Reduction for telling - 10%.

Helping

Q eventually provided everything that HMRC needed to recalculate his liabilities but only did this after HMRC used information powers following a substantial delay. Q refused to assist HMRC in identifying any enabler or any person holding offshore assets on his behalf.

Reduction for helping - 10%.

Giving access

All of the information HMRC needed to recalculate Q’s liabilities was supplied but only after HMRC had used information powers following a long delay. No access was given to the information that HMRC needed to identify any enabler or any person holding offshore assets on Q’s behalf.

Reduction for giving access - 15%.

The caseworker decided that this error was deliberate but not concealed and fell within category 2 (see CH116500 and CH116600). Therefore the standard penalty before any reduction was 105% of the PLR. As this disclosure was prompted and related to a year after 2015-16 the minimum penalty was 62.5%.

The penalty range was therefore 42.5% and applying the 35% reduction to this range gives a reduction of 14.87% and a penalty of 90.13%.

Example 2

The details are the same as above but in this case Q confirmed that there was an enabler and provided full details to the caseworker including

  • their name and address
  • a description of their enabling conduct
  • how Q first met the enabler, and
  • how he communicated with them.

Q also supplied copies of all correspondence with the enabler and also confirmed that he was not the beneficial owner of any asset held offshore on his behalf.

Taking this into account the caseworker calculated the reduction for the quality of the disclosure as

  • Telling - 20%
  • Helping - 20%
  • Giving access - 25%

Applying the 65% reduction to the 42.5% penalty range gives a reduction of 27.62% and a penalty of 77.38%.

Example 3

As in example 1, in 2017 Q diverted income offshore via a series of trusts. In 2018 HMRC commenced enquiries into Q’s affairs which were focused on his offshore income.

Q made a full disclosure on challenge and provided full co-operation to enable the caseworker to calculate the correct tax due. The whole enquiry only took four months to conclude, however Q refused to answer any questions about whether he had been advised to divert his income offshore. Q also declined to provide any information about whether or not he had been assisted by an enabler, or details of the person who held assets on his behalf outside the UK.

When calculating the penalty reduction the caseworker made the following recommendations that were accepted.

Telling

Although Q provided full co-operation and promptly supplied all of the required information to enable his liabilities to be correctly calculated, he does not receive the full reduction because he refused to supply any additional information about any enabler or who held assets on his behalf outside the UK.

Reduction for telling - 20%.

Helping

Q promptly provided everything that HMRC needed to know to recalculate his liabilities, however his refusal to provide any assistance to help HMRC to identify any enabler or any person holding offshore assets on his behalf means that he cannot receive the full reduction.

Reduction for helping - 30%.

Giving access

All of the information HMRC needed to recalculate Q’s liabilities was supplied very quickly but no access was given to the information that HMRC needed to identify any enabler or any person holding offshore assets on Q’s behalf.

Reduction for giving access - 20%.

The error was deliberate but not concealed and fell within category 2 (see CH116500 and CH116600). Therefore the standard penalty before any reduction was 105% of the PLR. As this disclosure was prompted and related to a year after 2015-16 the minimum penalty was 62.5%.

The penalty range was therefore 42.5% and applying the 70% reduction to this range gives a reduction of 29.75% and a penalty of 75.25%.