PART 1 U.K.Liability for penalty for failure to correct
Failure to correct relevant offshore tax non-complianceU.K.
1U.K.A penalty is payable by a person who—
(a)has any relevant offshore tax non-compliance to correct at the end of the tax year 2016-17, and
(b)fails to correct the relevant offshore tax non-compliance within the period beginning with 6 April 2017 and ending with 30 September 2018 (referred to in this Schedule as “the RTC period”).
Main definitions: generalU.K.
2U.K.Paragraphs 3 to 13 have effect for the purposes of this Schedule.
“Relevant offshore tax non-compliance” U.K.
3(1)At the end of the 2016-17 tax year a person has “relevant offshore tax non-compliance” to correct if—U.K.
(a)Conditions A and B are satisfied in respect of any offshore tax non-compliance committed by that person on or before 5 April 2017 (“the original offshore tax non-compliance”), and
(b)Condition C will be satisfied on the relevant date (see paragraph 6).
(2)Where the original offshore tax non-compliance committed by a person has been corrected in part by the end of the tax year 2016-17, the person's “relevant offshore tax non-compliance” is the uncorrected part of the original offshore tax non-compliance.
4U.K.Condition A is that the original offshore tax non-compliance has not been fully corrected before the end of the tax year 2016-17 (see paragraph 13).
5U.K.Condition B is that—
(a)the original offshore tax non-compliance involved a potential loss of revenue when it was committed, and
(b)if the original offshore tax non-compliance has been corrected in part by the end of the tax year 2016-17, the uncorrected part at that time involved a potential loss of revenue.
6(1)Condition C is that on the relevant date it is lawful, on the assumptions set out in sub-paragraph (2), for HMRC to assess the person concerned to any tax the liability to which would have been disclosed to or discovered by HMRC if on that date—U.K.
(a)where none of the original offshore tax non-compliance was corrected before the end of the 2016-17 tax year, HMRC were aware of the information missing as a result of the failure to correct that tax non-compliance, or
(b)where the original offshore tax non compliance was corrected in part before that time, HMRC were aware of the information missing as a result of the failure to correct the rest of that tax non-compliance.
(2)The assumptions are—
(a)that paragraph 26 is to be disregarded, and
(b)where the tax at stake is inheritance tax, that the relevant offshore tax non-compliance is not corrected before the relevant date
(3)In this paragraph “the relevant date” is—
(a)where the tax at stake is income tax or capital gains tax, 6 April 2017, and
(b)where the tax at stake is inheritance tax, the day after the day on which this Act is passed.
“Offshore tax-non compliance” etcU.K.
7(1)“Offshore tax non-compliance” means tax non-compliance which involves an offshore matter or an offshore transfer, whether or not it also involves an onshore matter.U.K.
(2)Tax non-compliance “involves an onshore matter” if and to the extent that it does not involve an offshore matter or an offshore transfer.
(3)For the meaning of “involves an offshore matter or an offshore transfer” (in relation to the different descriptions of tax non-compliance) see paragraphs 9 to 11.
“Tax non-compliance” U.K.
8(1)“Tax non-compliance” means any of the following—U.K.
(a)a failure to comply on or before the filing date with an obligation under section 7 of TMA 1970 to give notice of chargeability to income tax or capital gains tax,
(b)a failure to comply on or before the filing date with an obligation to deliver to HMRC a return or other document which is listed in sub-paragraph (3), or
(c)delivering to HMRC a return or other document which is listed in sub-paragraph (3) or (4) and contains an inaccuracy which amounts to, or leads to—
(i)an understatement of a liability to tax,
(ii)a false or inflated statement of a loss, or
(iii)a false or inflated claim to repayment of tax.
(2)In sub-paragraph (1)—
(a)“filing date”, in relation to a notice of chargeability or a return or other document, means the date by which it is required to be given, made or delivered to HMRC,
(b)“loss” includes a charge, expense, deficit and any other amount which may be available for, or relied on to claim, a deduction or relief, and
(c)“repayment of tax” includes a reference to allowing a credit against tax.
(3)The documents relevant for the purposes of both of paragraphs (b) and (c) of sub-paragraph (1) are (so far as they relate to the tax or taxes shown in the first column)—
| Tax to which document relates | Document |
|---|---|
| Income tax or capital gains tax | Return, accounts, statement or document required under section 8(1) of TMA 1970 (personal return) |
| Income tax or capital gains tax | Return, accounts, statement or document required under section 8A(1) of TMA 1970 (trustee's return) |
| Income tax | Return, accounts, statement or document required under section 12AA(2) or (3) of TMA 1970 (partnership return) |
| Income tax | Return under section 254 of FA 2004 (pension schemes) |
| Income tax | Particulars or documents required under regulation 12 of the Retirement Benefits Schemes (Information Powers) Regulations 1995 (SI 1995/3101) (information relating to pension schemes) |
| Capital gains tax | NRCGT return under section 12ZB of TMA 1970 |
| Inheritance tax | Account under section 216 or 217 of IHTA 1984. |
(4)The documents relevant for the purposes only of paragraph (c) of sub-paragraph (1) are (so far as they relate to the tax or taxes shown in the first column)—
| Tax to which document relates | Document |
|---|---|
| Income tax or capital gains tax | Return, statement or declaration in connection with a claim for an allowance, deduction or relief |
| Income tax or capital gains tax | Accounts in connection with ascertaining liability to tax |
| Income tax or capital gains tax | Statement or declaration in connection with a partnership return |
| Income tax or capital gains tax | Accounts in connection with a partnership return |
| Inheritance tax | Information or document under regulations under section 256 of IHTA 1984 |
| Inheritance tax | Statement or declaration in connection with a deduction, exemption or relief. |
| Income tax, capital gains tax or inheritance tax | Any other document given to HMRC by a person (“P”) which is likely to be relied on by HMRC to determine, without further inquiry, a question about— (a) P's liability to tax; (b) payments by P by way of or in connection with tax; (c) any other payment by P (including penalties); (d) repayments, or any other kind of payment or credit, to P. |
“Involves an offshore matter” and “involves an offshore transfer”U.K.
9(1)This paragraph applies to any tax non-compliance consisting of a failure to comply with an obligation under section 7 of TMA 1970 to notify chargeability to income tax or capital gains tax.U.K.
(2)The tax non-compliance “involves an offshore matter” if the potential loss of revenue 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.
(3)The tax non-compliance “involves an offshore transfer” if—
(a)it does not involve an offshore matter, and
(b)the applicable condition is satisfied (see sub-paragraphs (4) and (5)).
(4)Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which tax is charged, or any part of the income—
(a)was received in a territory outside the UK, or
(b)was transferred on or before 5 April 2017 to a territory outside the UK.
(5)Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
(a)were received in a territory outside the UK, or
(b)were transferred on or before 5 April 2017 to a territory outside the UK.
(6)In the case of a transfer falling within sub-paragraph (4)(b) or (5)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.
(7)In this paragraph and paragraphs 10 and 11 “assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling.
10(1)This paragraph applies where—U.K.
(a)any tax non-compliance by a person consists of a failure to comply with an obligation to deliver a return or other document, and
(b)a complete and accurate return or other document would have included information that would have enabled or assisted HMRC to assess the person's liability to tax.
(2)The tax non-compliance “involves an offshore matter” if the liability to tax that would have been shown in the return or other document is or includes a liability to tax 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.
(3)Where the tax at stake is inheritance tax, assets are treated for the purposes of sub-paragraph (2) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.
(4)The tax non-compliance “involves an offshore transfer” if—
(a)it does not involve an offshore matter, and
(b)the applicable condition is satisfied in respect of the liability to tax that would have been shown by the return or other document (see sub-paragraphs (5) to (7)).
(5)Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which tax is charged, or any part of the income—
(a)was received in a territory outside the UK, or
(b)was transferred on or before 5 April 2017 to a territory outside the UK.
(6)Where the tax at stake is capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
(a)was received in a territory outside the UK, or
(b)was transferred on or before 5 April 2017 to a territory outside the UK.
(7)Where the liability to tax which would have been shown in the document is a liability to inheritance tax, the applicable condition is satisfied if—
(a)the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and
(b)after that disposition but on or before 5 April 2017 the assets, or any part of the assets, are transferred to a territory outside the UK.
(8)In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.
11(1)This paragraph applies to any tax non-compliance by a person if—U.K.
(a)the tax non-compliance consists of delivering or giving HMRC a return or other document which contains an inaccuracy, and
(b)the inaccuracy relates to information that would have enabled or assisted HMRC to assess the person's liability to tax.
(2)The tax non-compliance to which this paragraph applies “involves an offshore matter” if the information that should have been given in the tax document relates 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.
(3)Where the tax at stake is inheritance tax, assets are treated for the purposes of sub-paragraph (2) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.
(4)Tax non-compliance to which this paragraph applies “involves an offshore transfer” if—
(a)it does not involve an offshore matter, and
(b)the applicable condition is satisfied in respect of the liability to tax that would have been shown by the return or other document (see sub-paragraphs (5) to (7)).
(5)Where the tax at stake is income tax the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—
(a)was received in a territory outside the UK, or
(b)was transferred on or before 5 April 2017 to a territory outside the UK.
(6)Where the tax at stake is capital gains tax, the applicable condition is satisfied if—
(a)the information that should have been given in the tax document relates to the proceeds of the disposal on or by reference to which the tax is charged, and
(b)the proceeds, or any part of the proceeds—
(i)were received in a territory outside the UK, or
(ii)were transferred on or before 5 April 2017 to a territory outside the UK.
(7)Where the tax at stake is inheritance tax, the applicable condition is satisfied if—
(a)the information that should have been given in the tax document relates to the disposition that gives rise to the transfer of value by reason of which the tax becomes payable relates to a transfer of assets, and
(b)after that disposition but on or before 5 April 2017 the assets or any part of the assets are transferred to a territory outside the UK.
(8)In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.
“Tax” U.K.
12(1)References to “tax” are (unless in the context the reference is more specific) to income tax, capital gains tax or inheritance tax.U.K.
(2)References to “capital gains tax” do not include capital gains tax payable by companies in respect of chargeable gains accruing to them to the extent that those gains are NRCGT gains in respect of which the companies are chargeable to capital gains tax under section 14D or 188D of TCGA 1992 (see section 1(2A)(b) of that Act).
(3)In sub-paragraph (2) “company” has the same meaning as in TCGA 1992.
Correcting offshore tax non-complianceU.K.
13(1)This paragraph sets out how offshore tax non-compliance may be corrected.U.K.
(2)References to the correction of offshore tax non-compliance of any description are to the taking of any action specified in this paragraph as a means of correcting offshore tax non-compliance of that description.
(3)Offshore tax non-compliance consisting of a failure to notify chargeability may be corrected by—
(a)giving the requisite notice to HMRC (unless before doing so the person has received a notice requiring the person to make and deliver a tax return) and giving HMRC the relevant information by any means mentioned in paragraph (b),
(b)giving HMRC the relevant information—
(i)by making and delivering a tax return,
(ii)using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
(iii)communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
(iv)using a method agreed with an officer of Revenue and Customs.
(4)In sub-paragraph (3) “relevant information” means information relating to offshore tax that—
(a)had the requisite notice been given in time and the person given a notice to make and deliver a tax return, would have been required to be included in the tax return, and
(b)would have enabled or assisted HMRC to calculate the offshore tax due.
(5)Offshore tax non-compliance consisting of a failure to make or deliver a return or other document may be corrected by giving HMRC the relevant information by—
(a)making or delivering the requisite return or document,
(b)using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
(c)communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
(d)using a method agreed with an officer of Revenue and Customs.
(6)In subsection (5) “relevant information” means information relating to offshore tax that—
(a)should have been included in the return or other document, and
(b)would have enabled or assisted HMRC to calculate the offshore tax due.
(7)Offshore tax non-compliance consisting of making and delivering a return or other document containing an inaccuracy may be corrected by giving HMRC the relevant information by—
(a)in the case of an inaccurate tax document, amending the document or delivering a new document,
(b)using the digital disclosure service or any other service provided by HMRC as a means of correcting tax non-compliance,
(c)communicating it to an officer of Revenue and Customs in the course of an enquiry into the person's tax affairs, or
(d)using a method agreed with an officer of Revenue and Customs.
(8)In sub-paragraph (7) “relevant information” means information relating to offshore tax that—
(a)should have been included in the return but was not (whether due to an omission or the giving of inaccurate information), and
(b)would have enabled or assisted HMRC to calculate the offshore tax due.
(9)In this paragraph “offshore tax”, in relation to any offshore tax non-compliance, means tax corresponding to the offshore PLR in respect of the non-compliance.