Finance (No. 2) Act 2017

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”) who 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-compliance 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) A 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) allowing 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 persons 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) But 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, assisted or otherwise facilitated the conduct by the other person that constituted the offshore tax non-compliance.