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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Penalties for Inaccuracies: Calculating the penalty: Penalty reductions for disclosure: Maximum and minimum penalties for an inaccuracy involving an offshore matter and income tax or capital gains tax: Introduction

The guidance in this page applies only where

  • the tax at stake is income tax or capital gains tax and
  • the inaccuracy involves an offshore matter and
  • the person gave HMRC an inaccurate return or other document which relates to 2011-12 or a later year on or after 6 April 2011.

It does not apply to the Construction Industry Scheme (CIS).

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 CH82482, and 
  • the tax involved is income tax or capital gains tax, and 
  • the inaccuracy is in category 2 or 3, see CH82483, 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. CH82483 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 CH82485. 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 CH82488.

CH82486 and CH82487 set out the higher maximum and minimum penalty percentages for offshore matters.