In certain circumstances the taxman can charge penalties of up to 200% of the additional tax due following its tax investigations. These swingeing penalties are due in cases relating to the so-called ‘offshore matters’.
From the tax year 2011/12 onwards HMRC can charge penalties of up to 200% of the additional tax due in the following circumstances:
- an inaccuracy in a tax return document;
- a failure to notify chargeability to tax (that is not telling HMRC that you have a tax liability);
- deliberately withholding information where a tax return is more than 12 months late.
Where the situations involve offshore matters (e.g. an offshore bank account) the penalty can be a maximum of 200%. An offshore matter is an inaccuracy, failure to notify, or deliberate withholding of information that results in a potential loss of tax, or a tax liability should have been shown on your tax return: and relates to:
- income arising from a source in a territory outside the UK, or
- assets situated or held in a territory outside the UK, or
- activities carried on wholly or mainly in a territory outside the UK:
The maximum 200% penalties are only charged in relation to territories (i.e. countries) that have not agreed to share information with HMRC (e.g. United Arab Emirates). Where a country exchanges information when the taxman requests the penalty is 150% maximum (e.g. India). For those countries that automatically exchange information with the taxman (e.g. Spain) the maximum penalty remains 100% of the tax. The list of the relevant territories and the categories can be found on the HMRC website. The list is updated from time to time as more and more countries reach agreements with the UK for the automatic exchange of information. For instance, Switzerland, Jersey, Guernsey, Isle of Man and Sark are on the 150% list for 2011/12, but in 2013 they all signed information sharing agreements with the UK – and are now on the 100% list for 2012/13 onwards.
How can Lynam Tax Enquiry Experts help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997
or Andrew Nutbrown on 07718 778710