Introduction Background Note
13.HMRC may charge penalties in cases where income, gains and assets etc. are not declared or notified to HMRC either deliberately or through a failure to take reasonable care. The maximum and minimum penalty vary according to the transparency of the jurisdiction in which the income etc. arises or is hidden. The higher penalties apply where owing to the inferior level of information exchange arrangements, HMRC is less likely to detect non-compliance (which may have formed part of the reason for choosing the territory concerned).
14.As more overseas territories enter into agreements to provide greater automatic exchange of information with the UK under the new Common Reporting Standard (with first information exchanges to be made in 2017), there is a risk that money and investments will be moved from those territories to others that have not entered into such agreements in order to continue to “hide” past failures to pay tax lawfully payable. While the past failures are already liable to penalties there would be no further sanction for new, additional steps taken to continue hiding the original failures. These provisions address this by imposing a further penalty for an offshore asset move irrespective of whether the conduct giving rise to the “original penalty” occurred before or after the day on which Finance Act 2015 receives Royal Assent, but only in cases where the original penalty reflected a deliberate failure. It is intended that territories will be “specified” once they have committed to exchanging information under the Common Reporting Standard.
15.The Background Note to Schedule 20 contains a fuller explanation of the offshore penalty regime and other measures being taken to deter non-compliance involving offshore matters.