Finance Bill (HL Bill 71)

(6) Where the tax at stake is capital gains tax, the applicable condition is
satisfied if the proceeds of the disposal on or by reference to which the tax is
charged, or any part of the proceeds—

(a) was received in a territory outside the UK, or

(b) 5was transferred on or before 5 April 2017 to a territory outside the
UK.

(7) Where the liability to tax which would have been shown in the document is
a liability to inheritance tax, the applicable condition is satisfied if—

(a) the disposition that gives rise to the transfer of value by reason of
10which the tax becomes chargeable involves a transfer of assets, and

(b) after that disposition but on or before 5 April 2017 the assets, or any
part of the assets, are transferred to a territory outside the UK.

(8) In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b),
references to the income or proceeds transferred are to be read as including
15references to any assets derived from or representing the income or
proceeds.

11 (1) This paragraph applies to any tax non-compliance by a person if—

(a) the tax non-compliance consists of delivering or giving HMRC a
return or other document which contains an inaccuracy, and

(b) 20the inaccuracy relates to information that would have enabled or
assisted HMRC to assess the person’s liability to tax.

(2) The tax non-compliance to which this paragraph applies “involves an
offshore matter” if the information that should have been given in the tax
document relates to—

(a) 25income arising from a source in a territory outside the UK,

(b) assets situated or held in a territory outside the UK,

(c) activities carried on wholly or mainly in a territory outside the UK, or

(d) anything having effect as if it were income, assets or activities of a
kind described above.

(3) 30Where the tax at stake is inheritance tax, assets are treated for the purposes
of sub-paragraph (2) as situated or held in a territory outside the UK if they
are so situated or held immediately after the transfer of value by reason of
which inheritance tax becomes chargeable.

(4) Tax non-compliance to which this paragraph applies “involves an offshore
35transfer” if—

(a) it does not involve an offshore matter, and

(b) the applicable condition is satisfied in respect of the liability to tax
that would have been shown by the return or other document (see
sub-paragraphs (5) to (7)).

(5) 40Where the tax at stake is income tax the applicable condition is satisfied if the
income on or by reference to which the tax is charged, or any part of the
income—

(a) was received in a territory outside the UK, or

(b) was transferred on or before 5 April 2017 to a territory outside the
45UK.

(6) Where the tax at stake is capital gains tax, the applicable condition is
satisfied if—

(a) the information that should have been given in the tax document
relates to the proceeds of the disposal on or by reference to which the
tax is charged, and

(b) the proceeds, or any part of the proceeds—

(i) 5were received in a territory outside the UK, or

(ii) were transferred on or before 5 April 2017 to a territory
outside the UK.

(7) Where the tax at stake is inheritance tax, the applicable condition is satisfied
if—

(a) 10the information that should have been given in the tax document
relates to the disposition that gives rise to the transfer of value by
reason of which the tax becomes payable relates to a transfer of
assets, and

(b) after that disposition but on or before 5 April 2017 the assets or any
15part of the assets are transferred to a territory outside the UK.

(8) In the case of a transfer falling within sub-paragraph (5)(b), (6)(b) or (7)(b),
references to the income, proceeds or assets transferred are to be read as
including references to any assets derived from or representing the income,
proceeds or assets.

20“Tax”

12 (1) References to “tax” are (unless in the context the reference is more specific)
to income tax, capital gains tax or inheritance tax.

(2) References to “capital gains tax” do not include capital gains tax payable by
companies in respect of chargeable gains accruing to them to the extent that
25those gains are NRCGT gains in respect of which the companies are
chargeable to capital gains tax under section 14D or 188D of TCGA 1992 (see
section 1(2A)(b) of that Act).

(3) In sub-paragraph (2) “company” has the same meaning as in TCGA 1992.

Correcting offshore tax non-compliance

13 (1) 30This paragraph sets out how offshore tax non-compliance may be corrected.

(2) References to the correction of offshore tax non-compliance of any
description are to the taking of any action specified in this paragraph as a
means of correcting offshore tax non-compliance of that description.

(3) Offshore tax non-compliance consisting of a failure to notify chargeability
35may be corrected by—

(a) giving the requisite notice to HMRC (unless before doing so the
person has received a notice requiring the person to make and
deliver a tax return) and giving HMRC the relevant information by
any means mentioned in paragraph (b),

(b) 40giving HMRC the relevant information—

(i) by making and delivering a tax return,

(ii) using the digital disclosure service or any other service
provided by HMRC as a means of correcting tax non-
compliance,

(iii) communicating it to an officer of Revenue and Customs in
the course of an enquiry into the person’s tax affairs, or

(iv) using a method agreed with an officer of Revenue and
Customs.

(4) 5In sub-paragraph (3) “relevant information” means information relating to
offshore tax that—

(a) had the requisite notice been given in time and the person given a
notice to make and deliver a tax return, would have been required to
be included in the tax return, and

(b) 10would have enabled or assisted HMRC to calculate the offshore tax
due.

(5) Offshore tax non-compliance consisting of a failure to make or deliver a
return or other document may be corrected by giving HMRC the relevant
information by—

(a) 15making or delivering the requisite return or document,

(b) using the digital disclosure service or any other service provided by
HMRC as a means of correcting tax non-compliance,

(c) communicating it to an officer of Revenue and Customs in the course
of an enquiry into the person’s tax affairs, or

(d) 20using a method agreed with an officer of Revenue and Customs.

(6) In subsection (5) “relevant information” means information relating to
offshore tax that—

(a) should have been included in the return or other document, and

(b) would have enabled or assisted HMRC to calculate the offshore tax
25due.

(7) Offshore tax non-compliance consisting of making and delivering a return
or other document containing an inaccuracy may be corrected by giving
HMRC the relevant information by—

(a) in the case of an inaccurate tax document, amending the document
30or delivering a new document,

(b) using the digital disclosure service or any other service provided by
HMRC as a means of correcting tax non-compliance,

(c) communicating it to an officer of Revenue and Customs in the course
of an enquiry into the person’s tax affairs, or

(d) 35using a method agreed with an officer of Revenue and Customs.

(8) In sub-paragraph (7) “relevant information” means information relating to
offshore tax that—

(a) should have been included in the return but was not (whether due to
an omission or the giving of inaccurate information), and

(b) 40would have enabled or assisted HMRC to calculate the offshore tax
due.

(9) In this paragraph “offshore tax”, in relation to any offshore tax non-
compliance, means tax corresponding to the offshore PLR in respect of the
non-compliance.

Part 2 Amount of penalty

Amount of penalty

14 (1) The penalty payable under paragraph 1 is 200% of the offshore PLR
5attributable to the uncorrected offshore tax non-compliance (subject to any
reduction under a provision of this Part of this Schedule).

(2) In this Part of this Schedule “the uncorrected offshore tax non-compliance”
means—

(a) the relevant offshore tax non-compliance, in a case where none of it
10is corrected within the RTC period, or

(b) so much of the relevant offshore tax non-compliance as has not been
corrected within the RTC period, in a case where part of it is
corrected within that period.

Offshore PLR

15 (1) 15In this Schedule “offshore PLR”, in relation to any offshore tax non-
compliance means the potential loss of revenue attributable to that non-
compliance, to be determined as follows.

(2) The potential lost revenue attributable to any offshore tax non-compliance is
(subject to sub-paragraphs (5) and (6)) —

(a) 20if the non-compliance is a failure to notify chargeability, the potential
lost revenue under the applicable provisions of paragraph 7 of
Schedule 41 to FA 2008 (or, where the original offshore tax non-
compliance took place before 1 April 2010, the amount referred to in
section 7(8) of TMA 1970),

(b) 25if the non-compliance is a failure to deliver a return or other
document, the amount of the liability to tax under the applicable
provisions of paragraph 24 of Schedule 55 to FA 2009 (or, where the
original offshore tax non-compliance took place before 1 April 2011,
the amount of liability to tax that would have been shown in the
30return as defined in section 93(9) of TMA 1970), and

(c) if the non-compliance is delivering a return or other document
containing an inaccuracy, the potential lost revenue under the
applicable provisions of paragraphs 5 to 8 of Schedule 24 to FA 2007
(or, where the original offshore tax non-compliance took place before
351 April 2008, the difference described in section 95(2) of TMA 1970).

(3) In its application for the purposes of sub-paragraph (2)(c) above, paragraph
6 of Schedule 24 to FA 2007 has effect as if—

(a) for sub-paragraph (1) there were substituted—

“(1) Where—

(a) 40P is liable to a penalty in respect of two or more
inaccuracies (each being an inaccuracy in a return
or other document listed in paragraph 8(3) or (4) of
Schedule 18) to F(No 2)A 2017) in relation to a tax
year or, in the case of inheritance tax, a single
45transfer of value,

(b) in relation to any one (or more than one) of those
inaccuracies, the delivery of the return or other
document containing it constitutes offshore tax
non-compliance, and

(c) 5the calculation of potential lost revenue
attributable to each of those inaccuracies depends
on the order in which they are corrected,

the potential lost revenue attributable to any offshore tax
non-compliance constituted by any one of those
10inaccuracies is to be taken to be such amount as is just and
reasonable.

(1A) In sub-paragraph (1) “offshore tax non-compliance” has
the same meaning as in Schedule 18 to F(No2)A 2017.”; and

(b) in sub-paragraph (4), for paragraphs (b) to (d) there were
15substituted—

“(b) other understatements.”

(4) In sub-paragraphs (5) and (6) “combined tax non-compliance” is tax non-
compliance that—

(a) involves an offshore matter or an offshore transfer, but

(b) 20also involves an onshore matter.

(5) Any combined tax non-compliance is to be treated for the purposes of this
Schedule as if it were two separate acts of tax non-compliance, namely—

(a) the combined tax non-compliance so far as it involves an offshore
matter or an offshore transfer (which is then offshore tax non-
25compliance within the meaning of this Schedule), and

(b) the combined tax non-compliance so far as it involves an onshore
matter.

(6) The potential lost revenue attributable to the offshore tax non-compliance
referred to in sub-paragraph (5)(a) is to be taken to be such share of the
30potential lost revenue attributable to the combined tax non-compliance as is
just and reasonable.

Reduction of penalty for disclosure etc by person liable to penalty

16 (1) This paragraph provides for a reduction in a penalty under paragraph 1 for
any uncorrected relevant offshore tax non-compliance if the person (“P”)
35who is liable to the penalty discloses any matter mentioned in sub-
paragraph (2) that is relevant to the non-compliance or its correction or to the
assessment or enforcement of the offshore tax attributable to it.

(2) The matters are—

(a) chargeability to income tax or capital gains tax (where the tax non-
40compliance is a failure to notify chargeability),

(b) a missing tax return,

(c) an inaccuracy in a document,

(d) a supply of false information or a withholding of information, or

(e) a failure to disclose an under-assessment.

(3) 45A person discloses a matter for the purposes of this paragraph only by—

(a) telling HMRC about it,

(b) giving HMRC reasonable help in relation to the matter (for example
by quantifying an inaccuracy in a document),

(c) informing HMRC of any person who acted as an enabler of the
relevant offshore tax non-compliance or the failure to correct it, and

(d) 5allowing HMRC access to records—

(i) for any reasonable purpose connected with resolving the
matter (for example for the purpose of ensuring that an
inaccuracy in a document is fully corrected), and

(ii) for the purpose of ensuring that HMRC can identify all
10persons who may have acted as an enabler of the relevant
offshore tax non-compliance or the failure to correct it.

(4) Where a person liable to a penalty under paragraph 1 discloses a matter
HMRC must reduce the penalty to one that reflects the quality of the
disclosure.

(5) 15But the penalty may not be reduced below 100% of the offshore PLR.

(6) In relation to disclosure or assistance, “quality” includes timing, nature and
extent.

(7) For the purposes of sub-paragraph (3) a person “acted as an enabler” of
relevant offshore tax non-compliance by another if the person encouraged,
20assisted or otherwise facilitated the conduct by the other person that
constituted the offshore tax non-compliance.

17 (1) If they think it right because of special circumstances, HMRC may reduce a
penalty under paragraph 1.

(2) In sub-paragraph (1) “special circumstances” does not include—

(a) 25ability to pay, or

(b) the fact that a potential loss of revenue from one taxpayer is balanced
by a potential overpayment by another.

(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference
to—

(a) 30staying a penalty, or

(b) agreeing a compromise in relation to proceedings for a penalty.

Procedure for assessing penalty, etc

18 (1) Where a person is found liable for a penalty under paragraph 1 HMRC
must—

(a) 35assess the penalty,

(b) notify the person, and

(c) state in the notice—

(i) the uncorrected relevant offshore tax non-compliance to
which the penalty relates, and

(ii) 40the tax period to which that offshore tax non-compliance
relates.

(2) A penalty must be paid before the end of the period of 30 days beginning
with the day on which notification of the penalty is issued.

(3) An assessment of a penalty—

(a) is to be treated for procedural purposes in the same way as an
assessment to tax (except in respect of a matter expressly provided
for by this Schedule),

(b) may be enforced as if it were an assessment to tax, and

(c) 5may be combined with an assessment to tax.

(4) A supplementary assessment may be made in respect of a penalty if an
earlier assessment operated by reference to an underestimate of the liability
to tax that would have been shown in a return.

(5) Sub-paragraph (6) applies if—

(a) 10an assessment in respect of a penalty is based on a liability to offshore
tax that would have been shown on a return, and

(b) that liability is found by HMRC to have been excessive.

(6) HMRC may amend the assessment so that it is based upon the correct
amount.

(7) 15But an amendment under sub-paragraph (6)—

(a) does not affect when the penalty must be paid, and

(b) may be made after the last day on which the assessment in question
could have been made under paragraph 19.

19 (1) An assessment of a penalty under paragraph 1 in respect of uncorrected
20relevant offshore tax non-compliance must be made before the end of the
relevant period for that non-compliance.

(2) If the non-compliance consists of a failure to notify chargeability, the
relevant period is the period of 12 months beginning with—

(a) the end of the appeal period for the assessment of tax unpaid by
25reason of the failure, or

(b) if there is no such assessment, the date on which the amount of tax
unpaid by reason of the failure is ascertained.

(3) If the non-compliance consists of a failure to submit a return or other
document, the relevant period is the period of 12 months beginning with—

(a) 30the end of the appeal period for the assessment of the liability to tax
which would have been shown in the return, or

(b) if there is no such assessment, the date on which that liability is
ascertained.

(4) If the non-compliance consists of making and delivering a tax document
35containing an inaccuracy, the relevant period is the period of 12 months
beginning with—

(a) the end of the appeal period for the decision correcting the
inaccuracy, or

(b) if there is no assessment to the tax concerned within paragraph (a),
40the date on which the inaccuracy is corrected.

(5) In this paragraph references to the appeal period are to the period during
which—

(a) an appeal could be brought, or

(b) an appeal that has been brought has not been finally determined or
45withdrawn.

Appeals

20 A person may appeal against—

(a) a decision of HMRC that a penalty under paragraph 1 is payable by
that person, or

(b) 5a decision of HMRC as to the amount of a penalty under paragraph
1 payable by the person.

21 (1) An appeal under paragraph 20 is to be treated in the same way as an appeal
against an assessment to the tax at stake (including by the application of any
provision about bringing the appeal by notice to HMRC, about HMRC
10review of the decision or about determination of the appeal by the First-tier
Tribunal or Upper Tribunal).

(2) Sub-paragraph (1) does not apply—

(a) so as to require the person bringing the appeal to pay a penalty
before an appeal against the assessment of the penalty is determined,

(b) 15in respect of any other matter expressly provided for by this
Schedule.

22 (1) On an appeal under paragraph 20(a) that is notified to the tribunal, the
tribunal may affirm or cancel HMRC’s decision.

(2) On an appeal under paragraph 20(b) that is notified to the tribunal, the
20tribunal may—

(a) affirm HMRC’s decision, or

(b) substitute for that decision another decision that HMRC had power
to make.

(3) If the tribunal substitutes its own decision for HMRC’s, the tribunal may
25rely on paragraph 16 or 17 (or both)—

(a) to the same extent as HMRC (which may mean applying the same
percentage reduction as HMRC to a different starting point),

(b) to a different extent, but only if the tribunal thinks that HMRC’s
decision in respect of the application of that paragraph was flawed.

(4) 30In sub-paragraph (3)(b) “flawed” means flawed when considered in the light
of the principles applicable in proceedings for judicial review.

(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal
(as appropriate by virtue of paragraph 21(1)).

Reasonable excuse

23 (1) 35Liability to a penalty under paragraph 1 does not arise in relation to a
particular failure to correct any relevant offshore tax non-compliance within
the RTC period if the person concerned (P) satisfies HMRC or the relevant
tribunal (as the case may be) that there is a reasonable excuse for the failure.

(2) For this purpose—

(a) 40an insufficiency of funds is not a reasonable excuse, unless
attributable to events outside P’s control,

(b) where P relied on any other person to do anything, that cannot be a
reasonable excuse unless P took reasonable care to avoid the failure,

(c) where P had a reasonable excuse but the excuse has ceased, P is to be
treated as continuing to have the excuse if the failure is remedied
without unreasonable delay after the excuse ceased, and

(d) reliance on advice is to be taken automatically not to be a reasonable
5excuse if it is disqualified under sub-paragraph (3).

(3) Advice is disqualified (subject to sub-paragraph (4)) if—

(a) the advice was given to P by an interested person,

(b) the advice was given to P as a result of arrangements made between
an interested person and the person who gave the advice,

(c) 10the person who gave the advice did not have appropriate expertise
for giving the advice,

(d) the advice failed to take account of all P’s individual circumstances
(so far as relevant to the matters to which the advice relates), or

(e) the advice was addressed to, or was given to, a person other than P.

(4) 15Where advice would otherwise be disqualified under any of paragraphs (a)
to (d) of sub-paragraph (3) the advice is not disqualified if at the end of the
RTC period P—

(a) has taken reasonable steps to find out whether or not the advice falls
within that paragraph, and

(b) 20reasonably believes that it does not.

(5) In sub-paragraph (3) “an interested person” means, in relation to any
relevant offshore tax non-compliance—

(a) a person (other than P) who participated in relevant avoidance
arrangements or any transaction forming part of them, or

(b) 25a person who for any consideration (whether or not in money)
facilitated P’s entering into relevant avoidance arrangements.

(6) In this paragraph “avoidance arrangements” means arrangements as
respects which, in all the circumstances, it would be reasonable to conclude
that their main purpose, or one of their main purposes, is the obtaining of a
30tax advantage.

(7) But arrangements are not avoidance arrangements for the purposes of this
paragraph if (although they fall within sub-paragraph (6))—

(a) they are arrangements which accord with established practice, and

(b) HMRC had, at the time the arrangements were entered into,
35indicated its acceptance of that practice.

(8) Where any relevant offshore tax non-compliance arose originally because
information was submitted to HMRC on the basis that particular avoidance
arrangements had an effect which they did not have, those avoidance
arrangements are “relevant avoidance arrangements” in relation to that tax
40non-compliance.

(9) In sub-paragraph (6)—

(a) “arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable), and

(b) 45a “tax advantage” includes—

(i) relief or increased relief from tax,

(ii) repayment or increased repayment of tax,

(iii) avoidance or reduction of a charge to tax or an assessment to
tax,

(iv) avoidance of a possible assessment to tax,

(v) deferral of a payment of tax or advancement of a repayment
5of tax.

Double jeopardy

24 (1) Where by reason of any conduct a person—

(a) has been convicted of an offence, or

(b) is liable to a penalty otherwise than under paragraph 1 for which the
10person has been assessed (and the assessment has not been
successfully appealed against or withdrawn),

that conduct does not give rise to liability to a penalty under paragraph 1.

(2) In sub-paragraph (1) the reference to a penalty otherwise than under
paragraph 1—

(a) 15includes a penalty under paragraph 6 of Schedule 55 to FA 2009, but
does not include penalties under any other provision of that
Schedule, and

(b) includes a penalty under subsection (5) of section 93 of TMA 1970
but, does not include penalties under any other provision of that
20section.

(3) But the aggregate of—

(a) the amount of a penalty under paragraph 1, and

(b) the amount of a penalty under paragraph 5 of Schedule 55 which is
determined by reference to a liability to tax,

25must not exceed 200% of that liability to tax.

(4) In sub-paragraph (1) “conduct” includes a failure to act.

Application of provisions of TMA 1970

25 Subject to the provisions of this Part of this Schedule, the following
provisions of TMA 1970 apply for the purposes of this Part of this Schedule
30as they apply for the purposes of the Taxes Acts—

(a) section 108 (responsibility of company officers),

(b) section 114 (want of form), and

(c) section 115 (delivery and service of documents).

Part 3 35Further provisions relating to the requirement to correct

Extension of period for assessment etc of offshore tax

26 (1) This paragraph applies where—

(a) at the end of the tax year 2016-17 a person has relevant offshore tax
non-compliance to correct, and

(b) 40the last day on which it would (disregarding this paragraph) be
lawful for HMRC to assess the person to any offshore tax falls within
the period beginning with 6 April 2017 and ending with 4 April 2021.