The level of penalties are dependent on the behaviour of the taxpayer, whether a voluntary disclosure was made or prompted by HMRC, and the quality of the disclosure.
Table: Penalty levels
- Mistake after taking reasonable care - 0%
- Failure to take reasonable care - 0% to 30 % (15-30% if prompted)
- Deliberate understatement - 20% to 70% (35% to 70% if prompted)
- Deliberate understatement with concealment - 30% to 100% (50% to 100% if prompted)
New penalties were introduced, effective since 6 April 2011, to specifically deal with offshore non-compliance. This applies to income and capital gains tax only. The level of penalty will be dependent on the country where the income or gain arises:
Table: Offshore penalties
- Category 1 - automatic exchange of information: The penalty rate will be the same as under existing legislation
- Category 2 - exchange information on request: The penalty rate will be 1.5 times that in existing legislation - up to 150 per cent of tax
- Category 3 - no exchange of information: The penalty rate will be double that in existing legislation - up to 200 per cent of tax
See details on HMRC’s website - How territories are categorised for offshore penalties
