Paragraph 2

For paragraph 4 substitute—

“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”.”