1U.K.Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
2U.K.For paragraph 4 substitute—
“4(1)This paragraph sets out the penalty payable under paragraph 1.
(2)If the inaccuracy is in category 1, the penalty is—
(a)for careless action, 30% of the potential lost revenue,
(b)for deliberate but not concealed action, 70% of the potential lost revenue, and
(c)for deliberate and concealed action, 100% of the potential lost revenue.
(3)If the inaccuracy is in category 2, the penalty is—
(a)for careless action, 45% of the potential lost revenue,
(b)for deliberate but not concealed action, 105% of the potential lost revenue, and
(c)for deliberate and concealed action, 150% of the potential lost revenue.
(4)If the inaccuracy is in category 3, the penalty is—
(a)for careless action, 60% of the potential lost revenue,
(b)for deliberate but not concealed action, 140% of the potential lost revenue, and
(c)for deliberate and concealed action, 200% of the potential lost revenue.
(5)Paragraph 4A explains the 3 categories of inaccuracy.
4A(1)An inaccuracy is in category 1 if—
(a)it involves a domestic matter, or
(b)it involves an offshore matter and—
(i)the territory in question is a category 1 territory, or
(ii)the tax at stake is a tax other than income tax or capital gains tax.
(2)An inaccuracy is in category 2 if—
(a)it involves an offshore matter,
(b)the territory in question is a category 2 territory, and
(c)the tax at stake is income tax or capital gains tax.
(3)An inaccuracy is in category 3 if—
(a)it involves an offshore matter,
(b)the territory in question is a category 3 territory, and
(c)the tax at stake is income tax or capital gains tax.
(4)An inaccuracy “involves an offshore matter” if it results in a potential loss of revenue that is charged on or by reference to—
(a)income arising from a source in a territory outside the UK,
(b)assets situated or held in a territory outside the UK,
(c)activities carried on wholly or mainly in a territory outside the UK, or
(d)anything having effect as if it were income, assets or activities of a kind described above.
(5)An inaccuracy “involves a domestic matter” if it results in a potential loss of revenue that is charged on or by reference to anything not mentioned in sub-paragraph (4)(a) to (d).
(6)If a single inaccuracy is in more than one category (each referred to as a “relevant category”)—
(a)it is to be treated for the purposes of this Schedule as if it were separate inaccuracies, one in each relevant category according to the matters that it involves, and
(b)the potential lost revenue is to be calculated separately in respect of each separate inaccuracy.
(7)“Category 1 territory”, “category 2 territory” and “category 3 territory” are defined in paragraph 21A.
(8)“Assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling.
4BThe penalty payable under paragraph 1A is 100% of the potential lost revenue.
4CThe penalty payable under paragraph 2 is 30% of the potential lost revenue.
4DParagraphs 5 to 8 define “potential lost revenue”.”
3U.K.For paragraph 10 substitute—
“10(1)If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.
(2)But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—
(a)in the case of a prompted disclosure, in column 2 of the Table, and
(b)in the case of an unprompted disclosure, in column 3 of the Table.
| Standard % | Minimum % for prompted disclosure | Minimum % for unprompted disclosure |
|---|---|---|
| 30% | 15% | 0% |
| 45% | 22.5% | 0% |
| 60% | 30% | 0% |
| 70% | 35% | 20% |
| 105% | 52.5% | 30% |
| 140% | 70% | 40% |
| 100% | 50% | 30% |
| 150% | 75% | 45% |
| 200% | 100% | 60%”. |
4U.K.In paragraph 12 (interaction with other penalties), for sub-paragraph (4) substitute—
“(4)Where penalties are imposed under paragraphs 1 and 1A in respect of the same inaccuracy, the aggregate of the amounts of the penalties must not exceed the relevant percentage of the potential lost revenue.
(5)The relevant percentage is—
(a)if the penalty imposed under paragraph 1 is for an inaccuracy in category 1, 100%,
(b)if the penalty imposed under paragraph 1 is for an inaccuracy in category 2, 150%, and
(c)if the penalty imposed under paragraph 1 is for an inaccuracy in category 3, 200%.”
5U.K.In Part 5 (general), before the heading “Interpretation” insert—
21A(1)A category 1 territory is a territory designated as a category 1 territory by order made by the Treasury.
(2)A category 2 territory is a territory that is neither—
(a)a category 1 territory, nor
(b)a category 3 territory.
(3)A category 3 territory is a territory designated as a category 3 territory by order made by the Treasury.
(4)In considering how to classify a territory for the purposes of this paragraph, the Treasury must have regard to—
(a)the existence of any arrangements between the UK and that territory for the exchange of information for tax enforcement purposes,
(b)the quality of any such arrangements (in particular, whether they provide for information to be exchanged automatically or on request), and
(c)the benefit that the UK would be likely to obtain from receiving information from that territory, were such arrangements to exist with it.
(5)An order under this paragraph is to be made by statutory instrument.
(6)Subject to sub-paragraph (7), an instrument containing an order under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
(7)If the order is—
(a)the first order to be made under sub-paragraph (1), or
(b)the first order to be made under sub-paragraph (3),
it may not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, the House of Commons.
(8)An order under this paragraph does not apply to inaccuracies in a document given to HMRC (or, in a case within paragraph 3(2), inaccuracies discovered by P) before the date on which the order comes into force.
21B(1)The Treasury may by regulations make provision for determining for the purposes of paragraph 4A where—
(a)a source of income is located,
(b)an asset is situated or held, or
(c)activities are wholly or mainly carried on.
(2)Different provision may be made for different cases and for income tax and capital gains tax.
(3)Regulations under this paragraph are to be made by statutory instrument.
(4)An instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.”
6U.K.After paragraph 23A insert—
“23BUK” means the United Kingdom, including the territorial sea of the United Kingdom.”