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HMRC internal manual

Compliance Handbook

Offshore matters: asset-based penalties: identification and valuation of assets: asset-based income tax

This section applies where the principle tax at stake is asset-based income tax. For guidance on which tax is the principal tax at stake, see CH122310.

These values will be used for the purpose of calculating the asset based penalty.

The taxpayer is viewed as owning an asset if they are liable to asset-based income tax in relation to that asset.

The value of the asset will depend on whether the charge to income tax was triggered by a disposal or not:

  • If the disposal of the asset triggered the charge to income tax, the value of the asset is to be taken as its market value on the date of disposal.
  • If it was a part disposal, the value of the asset is to be taken as its full market value immediately before the part disposal took place.
  • If the charge to income tax was not triggered by a disposal, the value of the asset will be depend upon whether the taxpayer still owns the asset and a full or part disposal took place. If:

    • The taxpayer still owned the asset on the last day of the tax year to which the standard offshore tax penalty relates, the value of the asset is to be taken as the market value of the asset on that day.
    • The taxpayer disposed of the asset during the course of the tax year to which the standard offshore tax penalty relates, the value of the asset is to be taken as its market value on the date of disposal.
    • The taxpayer disposed of part of the asset during the tax year to which the standard offshore tax penalty relates, the value of the asset is to be taken as the market value of the part disposed on the date (or dates) of disposal, plus the market value of the part still owned by the taxpayer on the last day of the tax year in question.

If the value that has been arrived at by following any of the above rules does not appear to HMRC to be a fair and reasonable value, HMRC may value the asset any other way which appears to them to be fair and reasonable.

FA 16/SCH 22/Para 13