Finance (No. 2) Act 2017

Asset-based penalty in addition to penalty under paragraph 1

28 (1) Schedule 22 to FA 2016 (asset-based penalty for offshore inaccuracies and failures) is amended as follows.

(2) In paragraph 2 (meaning of standard offshore penalty)—

(a) in sub-paragraph (1) for “or (4)” substitute “(4) or (4A)”,

(b) after sub-paragraph (4) insert—

“(4A) A penalty falls within this paragraph if—

(a) it is imposed on a person under paragraph 1 of Schedule 18 to FA 2017 (requirement to correct relevant offshore tax non-compliance),

(b) the person was aware at any time during the RTC period that at the end of the 2016-17 tax year P had relevant offshore tax non-compliance to correct, and

(c) the tax at stake is (or includes) capital gains tax, inheritance tax or asset-based income tax.”, and

(c) after sub-paragraph (5) insert—

“(5A) Sub-paragraph (5) does not apply to a penalty imposed under paragraph 1 of Schedule 18 to FA 2017.”

(3) In paragraph 3 (tax year to which standard offshore penalty relates) after sub-paragraph (3) insert—

“(4) Where a standard offshore penalty is imposed under paragraph 1 of Schedule 18 to FA 2017, the tax year to which that penalty relates is—

(a) if the tax at stake in relation to the uncorrected relevant offshore tax non-compliance is income tax or capital gains tax, the tax year or years to which the failure or inaccuracy constituting the relevant offshore tax non-compliance in question relates;

(b) if the tax at stake in relation to the uncorrected relevant offshore tax non-compliance is inheritance tax, the year, beginning on 6 April and ending on the following 5 April, in which the liability to tax first arose.

(5) In sub-paragraph (4) references to uncorrected relevant offshore tax non-compliance are to the relevant offshore tax non-compliance in respect of which the standard offshore penalty is imposed.”

(4) In paragraph 5 (meaning of offshore PLR), in sub-paragraph (1)(a) after “FA 2008” insert “or Schedule 18 to FA 2017”.

(5) In paragraph 6 (restriction on imposition of multiple asset-based penalties for same asset), in sub-paragraph (1)(a) after “penalty” insert “(other than one imposed under paragraph 1 of Schedule 18 to FA 2017)”.

(6) After paragraph 6 insert—

“6A Where—

(a) a penalty has been imposed on a person under paragraph 1 of Schedule 18 to FA 2017, and

(b) the potential loss of revenue threshold has been met,

only one asset-based penalty is payable by the person in relation to any given asset.”

(7) In paragraph 13 (asset-based income tax) after sub-paragraph (2) insert—

“(2A) In relation to cases where the standard offshore penalty is a penalty falling within paragraph 2(4A), each reference to provisions of ITTOIA 2005 in column 1 of the Table in sub-paragraph (2) includes a reference—

(a) to the corresponding provisions of the legislation in force immediately before those provisions of ITTOIA 2005 came into force (and to any previous text of those corresponding provisions), and

(b) to any other provision that had the same purpose as, or a similar purpose to, any of those corresponding provisions (or any earlier text mentioned in paragraph (a)), if and so far as that other provision was in force—

(i) on or after 6 April 1997, but

(ii) before the corresponding provisions (or the earlier text mentioned in paragraph (a)) came into force.””

(8) In paragraph 19(2) (interpretation: incorporation of definitions from other legislation for “or Schedule 55 to FA 2009” substitute “Schedule 55 to FA 2009 or Part 1 of Schedule 18 to FA 2017”.