Finance Act 2008

Amount of penalty: standard amount U.K.

[F1 6 (1) This paragraph sets out the penalty payable under paragraph 1. U.K.

(2) If the failure is in category 1, the penalty is—

(a) for a deliberate and concealed failure, 100% of the potential lost revenue,

(b) for a deliberate but not concealed failure, 70% of the potential lost revenue, and

(c) for any other case, 30% of the potential lost revenue.

(3) If the failure is in category 2, the penalty is—

(a) for a deliberate and concealed failure, 150% of the potential lost revenue,

(b) for a deliberate but not concealed failure, 105% of the potential lost revenue, and

(c) for any other case, 45% of the potential lost revenue.

(4) If the failure is in category 3, the penalty is—

(a) for a deliberate and concealed failure, 200% of the potential lost revenue,

(b) for a deliberate but not concealed failure, 140% of the potential lost revenue, and

(c) for any other case, 60% of the potential lost revenue.

(5) Paragraph 6A explains the 3 categories of failure.

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

Commencement Information

I1 Sch. 41 para. 6 in force at 1.4.2010 with effect in accordance with art. 3 by S.I. 2009/511, art. 2

6A (1) A failure is in category 1 if— U.K.

(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) A failure is in category 2 if—

(a) it involves an offshore matter [F2 or an offshore transfer],

(b) the territory in question is a category 2 territory, and

(c) the tax at stake is income tax or capital gains tax.

(3) A failure is in category 3 if—

(a) it involves an offshore matter [F3 or an offshore transfer],

(b) the territory in question is a category 3 territory, and

(c) the tax at stake is income tax or capital gains tax.

(4) A failure “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.

[F4 (4A) A failure “involves an offshore transfer” if—

(a) it does not involve an offshore matter,

(b) it is deliberate (whether or not concealed) and results in a potential loss of revenue,

(c) the tax at stake is income tax or capital gains tax, and

(d) the applicable condition in paragraph 6AA is satisfied.]

(5) A failure “involves a domestic matter” if it results in a potential loss of revenue [F5 and does not involve either an offshore matter or an offshore transfer].

(6) If a single failure 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 failures, one in each relevant category according to the matters [F6 or transfers] that it involves, and

(b) the potential lost revenue in respect of each separate failure is taken to be such share of the potential lost revenue in respect of the single failure (see paragraphs 7 and 11) as is just and reasonable.

(7) For the purposes of this Schedule—

(a) paragraph 21A of Schedule 24 to FA 2007 (classification of territories) has effect, but

(b) an order under that paragraph does not apply to relevant obligations that are to be complied with by a date before the date on which the order comes into force.

F7 (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) In this paragraph [F8 and paragraph 6AA]—

• “assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling;

• “UK” means the United Kingdom, including the territorial sea of the United Kingdom.

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

F2 Words in Sch. 41 para. 6A(2)(a) inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(3); S.I. 2016/456, art. 4(1)

F3 Words in Sch. 41 para. 6A(3)(a) inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(4); S.I. 2016/456, art. 4(1)

F4 Sch. 41 para. 6A(4A) inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(5); S.I. 2016/456, art. 4(1)

F5 Words in Sch. 41 para. 6A(5) substituted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(6); S.I. 2016/456, art. 4(1)

F6 Words in Sch. 41 para. 6A(6)(a) inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(7); S.I. 2016/456, art. 4(1)

F7 Sch. 41 para. 6A(8) omitted (with effect in accordance with art. 4(2) of the commencing S.I.) by virtue of Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(8); S.I. 2016/456, art. 4(1)

F8 Words in Sch. 41 para. 6A(9) inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 11(9); S.I. 2016/456, art. 4(1)

[F9 6AA (1) This paragraph makes provision in relation to offshore transfers. U.K.

(2) 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) is received in a territory outside the UK, or

(b) is transferred before the calculation date to a territory outside the UK.

(3) 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) are received in a territory outside the UK, or

(b) are transferred before the calculation date to a territory outside the UK.

(4) In the case of a transfer falling within sub-paragraph (2)(b) or (3)(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.

(5) In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the failure involves an offshore transfer.

(6) In this paragraph “calculation date” means the date by reference to which the potential lost revenue is to be calculated (see paragraph 7).]

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

F9 Sch. 41 paras. 6AA, 6AB inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 12; S.I. 2016/456, art. 4(1)

[F9 6AB U.K. Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.]

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

F9 Sch. 41 paras. 6AA, 6AB inserted (with effect in accordance with art. 4(2) of the commencing S.I.) by Finance Act 2015 (c. 11), s. 120(2), Sch. 20 para. 12; S.I. 2016/456, art. 4(1)

6B U.K. The penalty payable under any of paragraphs 2, 3(1) and 4 is—

(a) for a deliberate and concealed act or failure, 100% of the potential lost revenue,

(b) for a deliberate but not concealed act or failure, 70% of the potential lost revenue, and

(c) for any other case, 30% of the potential lost revenue.

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

6C U.K. The penalty payable under paragraph 3(2) is 100% of the potential lost revenue.

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

[F10 6CA (1) The penalty payable under paragraph 3A is— U.K.

(a) for a deliberate and concealed act or failure, 100% of the potential lost revenue, and

(b) for a deliberate but not concealed act or failure, 70% of the potential lost revenue.

(2) No penalty is payable under paragraph 3A in any other case.]

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)

F10 Sch. 41 para. 6CA inserted (with effect in accordance with s. 42(2), Sch. 12 para. 29(1) of the amending Act) by Finance Act 2018 (c. 3), Sch. 12 para. 27(5)

6D U.K. Paragraphs 7 to 11 define “potential lost revenue”.]

Textual Amendments

F1 Sch. 41 paras. 6-6D substituted for Sch. 41 para. 6 (6.4.2011) by Finance Act 2010 (c. 13), s. 35(2), Sch. 10 para. 8; S.I. 2011/975, art. 2(1) (with art. 4)