Details of the Schedule
3.Paragraph 1 provides that a penalty is payable, in addition to a penalty for an earlier deliberate failure, where an asset is moved from one territory to another (a “relevant offshore asset move”) to prevent or delay the discovery of that original failure.
4.Paragraph 2 specifies which penalties for the earlier failure potentially trigger the additional penalty.
5.Paragraph 3 defines the term “deliberate failure” in relation to the “original penalty”.
6.Paragraph 4 defines the term “relevant offshore asset move”. Such an event occurs where a the taxpayer remains beneficial owner of the asset even though the asset has moved from a specified territory to a non-specified territory, the person holding the asset made a corresponding change of residence, or there was a change in ownership arrangements of the asset. In applying the tests, any second or later asset purchased with all or part of the proceeds of sale of the original asset will be regarded as the original asset.
7.Paragraph 4(5) and (6) provide that HM Treasury will make Statutory Instruments setting out which territories are “specified”.
8.Paragraph 5 defines the “relevant time” after which the occurrence of a “relevant offshore move” will cause Condition B of paragraph 1 of this Schedule to be met. For income tax and capital gains tax, the “relevant time” is the beginning of the tax year relevant to the failure or inaccuracy giving rise to the “original penalty”. For inheritance tax, the “relevant time” is the time when the liability for the tax at stake first arises.
9.Paragraph 6 provides that the amount of additional penalty is 50% of the original penalty. It also makes clear that although the original penalty is determined by reference to a liability to tax, the penalty under this Schedule is not (further distinguishing between the conduct giving rise to the two penalties).
10.Paragraph 7 provides for the assessment and notification of the penalty. The time limits for HMRC to assess the penalty are the same as those applying to the relevant “original penalty”. Payment must be made before the expiry of 30 days beginning on the day of notification. Procedurally, the penalty is treated in the same way as a tax assessment and may be enforced in the same way. An amendment must be made to the amount of penalty if the “original penalty” is amended (up or down).
11.Paragraph 8 affords a right of appeal against HMRC’s decision to impose a penalty under this Schedule which may be either affirmed or cancelled by a tribunal. Except where express provision is made in the Schedule, an appeal will be treated in the same way as an appeal against an assessment or determination of the tax concerned (including HMRC review of the decision and determination of the appeal by the First Tier Tribunal or Upper Tribunal).
12.Paragraph 9 provides that the Schedule has effect in relation to “relevant offshore asset moves” occurring after the day on which Finance Act 2015 receives Royal Assent. Apart from two exceptions, it does not matter if the liability for the original penalty arose before or after that day. The two cases in which a person will not be liable to the additional penalty are where:
the tax unpaid as a result of an inaccuracy giving rise to an “original penalty” under Schedule 24 FA 2007 has been assessed or determined before this legislation comes into effect; and
the tax unpaid as a result of a failure giving rise to an “original penalty” under Schedule 41 FA 2008 and Schedule 55 FA 2009 has been assessed or determined before this legislation comes into effect and the failure relating to it has been remedied by that day.
