On 24 May, HMRC have released a factsheet providing information on the imposition of the higher penalty regime for cases where offshore assets are involved.
The higher penalties apply to income tax and capital gains tax arising on overseas assets where HMRC find inaccuracies in returns or other documents which:
- Relate to the 2011/12 tax year onward;
- Are given to HMRC on or after 6 April 2011;
- Failure to notify that arises on or after 6 April 2012; and
- Deliberate withholding information when a return for the tax year 2011/12 or latter is more than 12 months late.
The penalty is determined by the ‘territory’ in which the income and gains arose. There are three different categories which are briefly summarised below.
Territories who have agreed to exchange information with the UK automatically. The maximum penalty is 100% of the tax
Territories that will exchange information only on request from HMRC. They will attract a maximum 150% penalty.
Those territories that do not have an information sharing agreement with HMRC in place. They will attract a maximum 200% penalty.
HMRC has provided a list of the various territories and the appropriate category on its website. See:
Advisors preparing returns for 2011/12 may wish to bring the new penalty regime for overseas assets to their clients’ attention to ensure that the overseas assets and any income and gains arising are properly reported.