4

1

This paragraph sets out the penalty payable under paragraph 1.

2

If the inaccuracy is in category 1, the penalty is—

a

for careless action, 30% of the potential lost revenue,

b

for deliberate but not concealed action, 70% of the potential lost revenue, and

c

for deliberate and concealed action, 100% of the potential lost revenue.

3

If the inaccuracy is in category 2, the penalty is—

a

for careless action, 45% of the potential lost revenue,

b

for deliberate but not concealed action, 105% of the potential lost revenue, and

c

for deliberate and concealed action, 150% of the potential lost revenue.

4

If the inaccuracy is in category 3, the penalty is—

a

for careless action, 60% of the potential lost revenue,

b

for deliberate but not concealed action, 140% of the potential lost revenue, and

c

for deliberate and concealed action, 200% of the potential lost revenue.

5

Paragraph 4A explains the 3 categories of inaccuracy.

4A

1

An inaccuracy is in category 1 if—

a

it involves a domestic matter, or

b

it involves an offshore matter and—

i

the territory in question is a category 1 territory, or

ii

the tax at stake is a tax other than income tax or capital gains tax.

2

An inaccuracy is in category 2 if—

a

it involves an offshore matter,

b

the territory in question is a category 2 territory, and

c

the tax at stake is income tax or capital gains tax.

3

An inaccuracy is in category 3 if—

a

it involves an offshore matter,

b

the territory in question is a category 3 territory, and

c

the tax at stake is income tax or capital gains tax.

4

An inaccuracy “involves an offshore matter” if it results in a potential loss of revenue that is charged on or by reference to—

a

income 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.

5

An inaccuracy “involves a domestic matter” if it results in a potential loss of revenue that is charged on or by reference to anything not mentioned in sub-paragraph (4)(a) to (d).

6

If a single inaccuracy is in more than one category (each referred to as a “relevant category”)—

a

it is to be treated for the purposes of this Schedule as if it were separate inaccuracies, one in each relevant category according to the matters that it involves, and

b

the potential lost revenue is to be calculated separately in respect of each separate inaccuracy.

7

“Category 1 territory”, “category 2 territory” and “category 3 territory” are defined in paragraph 21A.

8

“Assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling.

4B

The penalty payable under paragraph 1A is 100% of the potential lost revenue.

4C

The penalty payable under paragraph 2 is 30% of the potential lost revenue.

4D

Paragraphs 5 to 8 define “potential lost revenue”.