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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 inaccuracy involving an offshore matter and income tax or capital gains tax: Categories of inaccuracy

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).

There are three categories of inaccuracy that determine the level of the maximum and minimum penalties. An offshore matter, see CH82482, 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. CH82484 explains how territories are allocated to the different categories. See CH82485 for examples of how to decide which category an inaccuracy falls into.

Category 1

An inaccuracy is in category 1 if it involves

  • a domestic matter (anything that is not an offshore matter), or
  • an offshore matter and

    • the offshore matter is in a category 1 territory, or
    • the tax at stake is not income tax or capital gains tax.

The majority of all inaccuracies will fall into category 1. 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 or capital gains tax.

There are higher maximum and minimum penalty percentages for inaccuracies in category 2 and category 3. The percentages for category 2 are at CH82486.

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 or capital gains tax.

There are higher maximum and minimum penalty percentages for inaccuracies in category 2 and category 3. The percentages for category 3 are at CH82487.

FA07/SCH24/PARA4A