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Offshore penalties: reductions for disclosure

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The government has laid two sets of regulations, specifying the ‘additional information’ which individuals will have to disclose to HMRC in order to secure reductions in penalties for inaccuracies involving offshore matters, and setting out the maximum reduction available in relation to the new asset-based penalties.

The Penalties Relating to Offshore Matters and Offshore Transfers (Additional Information) Regulations, SI 2017/345, will require a person seeking a reduction in a penalty relating to an offshore matter or offshore transfer to provide information about:

  • any person (enabler) who encouraged, assisted or otherwise facilitated the conduct giving rise to the penalty in question; and
  • assets held in territories outside the UK and any nominees or entities used to hold those assets on behalf of the person subject to the penalty.

The type of information required in relation to enablers includes:

  • name and address;
  • a description of the enabler’s conduct that encouraged, assisted or otherwise facilitated the conduct by the individual giving rise to the penalty;
  • a description of how the first contact between the individual and the enabler was made and how contact was maintained; and
  • a description of all documents held by the individual relating to the enabler’s conduct.

Information required in relation to assets held outside the UK by another person includes:

  • name and address of any other joint beneficial owner of the asset;
  • the extent of the individual’s share of the beneficial ownership of the asset;
  • a description of all documents of title or other documents indicating the individual’s beneficial ownership;
  • details of where the asset is situated or held;
  • details of when and how the individual became a beneficial owner of the asset;
  • a description of all changes in the arrangements for the ownership of the asset since the individual became a beneficial owner;
  • the names and last known addresses of all persons who have been asset holders of the asset during the individual’s beneficial ownership of it; and
  • in relation to an asset holder who is not an individual, the name and business address (if known) of any director, senior manager, employee or agent of the asset holder who has advised or assisted the individual in relation to their beneficial ownership of the asset.

The Asset-based Penalty for Offshore Inaccuracies and Failures (Reductions for Disclosure and Co-operation) Regulations, SI 2017/334, set the maximum amount of reduction of the asset-based penalty for disclosure and co-operation as follows:

  • 50% of the standard amount in a case involving only unprompted disclosures, and
  • 20% of the standard amount in a case involving prompted disclosures.

Both sets of regulations come into force on 1 April 2017.