Guidance: Offences relating to offshore income, assets and activities

There are 3 criminal offences relating to offshore income, assets and activities. They were introduced in section 166, Finance Act 2016 and apply from 6 April 2017.

Offshore income, assets or activities are one or more of the following:

• income arising from a source in a territory outside the UK
• assets located or held in a territory outside the UK
• activities carried out mainly in a territory outside the UK

The offences apply if you fail to declare offshore income or gains and this results in more than £25,000 of tax due. They do not require proof of intent.

What the offences are

It’s a criminal offence if you:

• fail to notify HMRC that you are chargeable to income tax or capital gains before the end of the notification period — this usually ends 6 months after the end of the tax year
• do not submit a tax return before the end of the withdrawal period — this usually ends 2 years after the end of the tax year
• submit an inaccurate tax return, that is not corrected by the end of the amendment period — this usually ends on the second 31 January following the end of the tax year

If the tax return is not issued to you until after 31 October, you have three months from the date of issue to file the tax return. You have a further 12 months to amend the tax return.

These offences do not apply if:

• the additional tax due is £25,000 or less
• your offshore income or gains are reported to HMRC under the Common Report Standard (CRS)

If you think you have a defence

You will have a defence to these criminal offences if you prove you:

• have a reasonable excuse for failing to notify HMRC

• have a reasonable excuse for failing to submit the tax return

• took reasonable care to make sure that the return was correct and complete

If you claim you have a reasonable excuse or have taken reasonable care, the courts take account of your circumstances, ability, knowledge and experience.

What can happen if you’re convicted

If you’re convicted of any of these offences, the magistrates courts in England and Wales can impose a custodial sentence up to 51 weeks and an unlimited fine.

In Scotland and Northern Ireland, you could receive a custodial sentence up to 6 months and a fine of up to £5,000.

HMRC decides whether to commence a criminal investigation in line with our criminal investigation policy.

How to put your tax affairs in order

You should notify HMRC about your offshore income and gains in writing or on your tax return. Find out more information about Self Assessment tax returns.

Anyone who wants to disclose a UK tax liability that relates to an offshore issue can use the Worldwide Disclosure Facility.