The Penalties, Offshore Income etc. (Designation of Territories) Order 2011

Statutory Instruments

2011 No. 976

Capital Gains Tax

Income Tax

The Penalties, Offshore Income etc. (Designation of Territories) Order 2011

Made

28th March 2011

Coming into force

6th April 2011

The Treasury make the following Order in exercise of the powers conferred by paragraph 21A(1) to (4) of Schedule 24 to the Finance Act 2007(1).

In accordance with paragraph 21A(7) of Schedule 24 to that Act, a draft of this instrument was laid before the House of Commons and approved by a resolution of that House.

Citation and commencement U.K.

1.  This Order may be cited as the Penalties, Offshore Income etc. (Designation of Territories) Order 2011 and comes into force on 6th April 2011.

Commencement Information

I1 Art. 1 in force at 6.4.2011, see art. 1

Designation of territories U.K.

2.  The territories specified in the left hand column of the Table in the Schedule to this Order are designated as category 1 territories for the purposes of Schedule 24 to the Finance Act 2007(2) (penalties for errors).

Commencement Information

I2 Art. 2 in force at 6.4.2011, see art. 1

3.  The territories specified in the right hand column of the Table in the Schedule to this Order are designated as category 3 territories for the purposes of Schedule 24 to the Finance Act 2007.

Commencement Information

I3 Art. 3 in force at 6.4.2011, see art. 1

Michael Fabricant

James Duddridge

Two of the Lords Commissioners of Her Majesty’s Treasury

28th March 2011

Articles 2 and 3

SCHEDULE U.K.

Commencement Information

I4 Sch. in force at 6.4.2011, see art. 1

Designated Territories

Category 1 territories

Category 3 territories

Anguilla Aruba Australia Belgium Bulgaria Canada Cayman Islands Cyprus Czech Republic Denmark (not including Faroe Islands and Greenland) Estonia Finland France Germany Greece Guernsey Hungary Ireland Isle of Man Italy Japan Korea, South Latvia [F1 Liechtenstein ] Lithuania Malta Montserrat Netherlands (not including Bonaire, Sint Eustatius and Saba) New Zealand (not including Tokelau) Norway Poland Portugal Romania Slovakia Slovenia Spain Sweden [F1 Switzerland ] United States of America (not including overseas territories and possessions)

Albania Algeria Andorra F2 ... F2 ... F2 ... F2 ... F2 ... Bonaire, Sint Eustatius and Saba Brazil Cameroon Cape Verde Colombia Congo, Republic of the Cook Islands Costa Rica Curaçao Cuba Democratic People’s Republic of Korea F2 ... Dominican Republic Ecuador El Salvador Gabon F2 ... Guatemala Honduras Iran Iraq Jamaica Kyrgyzstan Lebanon Macau Marshall Islands F2 ... Micronesia, Federated States of Monaco Nauru Nicaragua Niue Palau Panama Paraguay Peru F2 ... F2 ... F2 ... F2 ... Seychelles Sint Maarten Suriname Syria Tokelau Tonga Trinidad and Tobago United Arab Emirates Uruguay

Textual Amendments

F1 Words in Sch. Table inserted (24.7.2013) by The Penalties, Offshore Income etc. (Designation of Territories) (Amendment) Order 2013 (S.I. 2013/1618), arts. 1, 2(a)

F2 Words in Sch. Table omitted (24.7.2013) by virtue of The Penalties, Offshore Income etc. (Designation of Territories) (Amendment) Order 2013 (S.I. 2013/1618), arts. 1, 2(b)

EXPLANATORY NOTE

(This note is not part of the Order)

This Order designates certain territories as category 1 territories or as category 3 territories for the purposes of Schedule 24 to the Finance Act 2007 (c. 11), as amended by Schedule 10 to the Finance Act 2010 (c. 13).

Schedule 10 to the Finance Act 2010 amends the level of penalties that may be charged in cases of non-compliance with UK income tax and capital gains tax obligations with respect to offshore income, gains and assets.

New paragraphs 4 and 4A of Schedule 24, inserted by paragraph 2 of Schedule 10, provide that every inaccuracy falls into one of three categories. The changes made by paragraphs 3 and 4 of Schedule 10 mean that existing penalty levels will apply to category 1 inaccuracies (which includes all domestic inaccuracies and inaccuracies relating to taxes other than income tax and capital gains tax). However, inaccuracies in category 2 and 3 are increased by factors of 1.5 and 2 respectively.

The categories of inaccuracies are defined by reference to whether the territory, to which the inaccuracy in connection with offshore income, gains or assets relates, is a category 1 territory, a category 2 territory or a category 3 territory. Every territory in the world, other than the UK, falls into one of these categories. Paragraph 21A of Schedule 24 to the Finance Act 2007 (inserted by paragraph 5 of Schedule 10 to the Finance Act 2010) provides for this classification of territories. Territories falling into category 1 and 3 are listed in this Order and any territory, other than the UK, not listed in category 1 or category 3 falls by default into category 2.

Paragraph 21A of Schedule 24 also has effect for the purposes of Schedule 41 to the Finance Act 2008 (c. 9) (penalties for failure to notify chargeability) and Schedule 55 to the Finance Act 2009 (c. 10) (the late filing of returns) (see paragraph 6A(7) of Schedule 41 to the Finance Act 2008 and paragraph 6A(7) of Schedule 55 to the Finance Act 2009, inserted by paragraphs 8 and 12, respectively, of Schedule 10 to the Finance Act 2010).

A full Impact Assessment has not been produced for this instrument as a negligible impact on the private and voluntary sectors is foreseen.

(1)

2007 c. 11. Paragraph 21A of Schedule 24 to the Finance Act 2007 is inserted by paragraphs 1 and 5 of Schedule 10 to the Finance Act 2010 (c. 13) from a day to be appointed.

(2)

See also paragraph 6A(7) of Schedule 41 to the Finance Act 2008 (c. 9) (penalties: failure to notify and certain VAT and excise wrongdoing) and paragraph 6A(7) of Schedule 55 to the Finance Act 2009 (c. 10) (penalties for failure to make returns etc). Paragraph 6A(7) of Schedule 41 to the Finance Act 2008 and paragraph 6A(7) of Schedule 55 to the Finance Act 2009 are inserted by paragraphs 8 and 12, respectively, of Schedule 10 to the Finance Act 2010 from a day to be appointed.