United Kingdom

Penalties 

The new penalty provisions for incorrect tax returns effectively apply for the 2008/09 tax year onwards for personal tax. For companies, the new rules apply for accounting periods commencing on or after 1 April 2008.

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

Contact us

Derek-ScottDerek Scott

 

+44 (0)20 7311 2618
tax.investigations@kpmg.co.uk

Liechtenstein Disclosure Facility (LDF)

The Liechtenstein Disclosure Facility (LDF) provides a framework for the disclosure of irregularities connected with overseas assets held anywhere in the world with unique benefits and on favourable terms.

 

Tax Settlements and Investigations

KPMG can also assist companies, partnerships, employers, trustees, solicitors, accountants and other advisors navigate through the demanding process of an HMRC investigation.