The offshore asset moves penalty

The offshore asset moves penalty in Schedule 21 to the Finance Act 2015 adds 50% to a penalty for deliberate offshore non compliance where an asset was moved, after 26 March 2015, from a territory that shares information automatically to one that does not, or its ownership was rearranged, with a main purpose of keeping the lost tax hidden from HMRC. It applies to income tax, capital gains tax and inheritance tax, and the only appeal is against whether it is due.

Why does this penalty exist?

Under the common reporting standard, HMRC receives financial account data from more than 100 countries. A person who has already evaded tax might respond by moving money to a territory that is not part of that exchange. Schedule 21 targets that behaviour. It does not penalise the original evasion again; it penalises the move, by adding half as much again to the penalty for the evasion. HMRC’s Compliance Handbook covers it at CH119100, and caseworkers must refer cases to a technical specialist team before acting (CH119200).

Which underlying penalties can trigger it?

Paragraph 2 lists the “original penalties”:

• an inaccuracy penalty under paragraph 1 of Schedule 24 to the Finance Act 2007 where the tax is income tax, capital gains tax or inheritance tax;
• a penalty under Schedule 41 to the Finance Act 2008 for failing to notify chargeability under section 7 of the Taxes Management Act 1970;
• a penalty under paragraph 6 of Schedule 55 to the Finance Act 2009 for failing to file for more than 12 months, for those three taxes;
• a failure to correct penalty under Schedule 18 to the Finance (No. 2) Act 2017;
• a penalty under paragraph 3 of Schedule 25 to the Finance Act 2021 for deliberately withholding information, where the tax is income tax or capital gains tax.

For the first four, paragraphs 1 and 3 require a deliberate failure, whether or not concealed. For a failure to correct penalty, “deliberate” means the person knew at some point between 6 April 2017 and 30 September 2018 that they had offshore non compliance to correct. A careless inaccuracy can never lead to this penalty.

What counts as a relevant offshore asset move?

Under paragraph 4, while the person is the beneficial owner of an asset, one of three things happens and the person remains the beneficial owner of the asset, or part of it, immediately afterwards:

1. the asset stops being situated or held in a specified territory and becomes situated or held in a non specified territory;
2. the person holding the asset stops being resident in a specified territory and becomes resident in a non specified one; or
3. the arrangements for the ownership of the asset change.

The third limb catches restructuring without any physical move, such as putting an account into a company or trust while keeping the benefit. If an asset is sold and the proceeds are reinvested, directly or indirectly, in another asset the person owns, the two are treated as the same asset. “Asset” includes sterling, so moving cash counts. HMRC’s factsheet CC/FS17 describes a move from a specified territory or the UK to a non specified territory.

Which territories are specified?

The Offshore Asset Moves Penalty (Specified Territories) Regulations 2015 list the specified territories; anything not listed is non specified. The list has been changed twice:

• From 3 November 2017, eight territories were added and two removed. CH119100 says Albania and the United States were specified only from 27 March 2015 to 2 November 2017.
• From 12 December 2024, seventeen were added (including Pakistan, Thailand, Taiwan, Ukraine, Nigeria and Kenya) and Russia, Trinidad and Tobago and the Caribbean public bodies of the Netherlands (Bonaire, St Eustatius and Saba) were removed.

Paragraph 4(2) tests the status of each territory at the time of the move. So a transfer to Russia before 12 December 2024 was a move to a specified territory, but the same transfer now is a move to a non specified one. The United States is not on the current list either.

When must the move happen?

Paragraph 9 applies the Schedule to moves after the Finance Act 2015 was passed on 26 March 2015. The move must also come after the “relevant time” in paragraph 5:

• for an inaccuracy or late filing penalty on income tax or capital gains tax, the start of the tax year concerned;
• for inheritance tax, when liability first arose;
• for a failure to notify, the start of the tax year to which the obligation relates;
• for a failure to correct penalty, when Schedule 18 came into force, which CH119100 gives as 16 November 2017.

The move must also have as its main purpose, or one of its main purposes, preventing or delaying HMRC’s discovery of a potential loss of revenue, and the original penalty must relate to that same loss (paragraph 1(4)). A move made purely for a genuine commercial or family reason fails this test, so the evidence of why the money moved is central.

How much is the penalty?

Paragraph 6 fixes the penalty at 50% of the amount of the original penalty payable. There is no separate reduction for disclosure: the reduction happens in the original penalty, and the asset moves penalty follows it. If HMRC later amends the original penalty, paragraph 7(5) requires the asset moves penalty to be amended at the same time. Paragraph 6(2) says it is not a penalty determined by reference to a liability to tax.

Illustration only. Tom deliberately left interest on a Jersey account off his returns. In 2019 he moved the money to a bank in a non specified territory to keep it out of the information exchange. HMRC finds the income and charges a deliberate inaccuracy penalty of £12,000 after reductions. The asset moves penalty is £6,000, making £18,000 in penalties before tax and interest. If the offshore tax for any year exceeded £25,000 and the income is asset based, an asset based penalty could be added as well.

HMRC’s own example at CH119100 shows the same pattern over several years: Pete omitted interest from a bank in a specified territory for 2016 to 2017 and 2017 to 2018, moved the capital to a non specified territory in 2018 to 2019, and became liable to an asset moves penalty of 50% of each year’s inaccuracy penalty.

How is it assessed and can it be appealed?

HMRC must assess the penalty, notify the person and state the tax period (paragraph 7). CH119200 says this is the tax period in which the move took place. It is payable within 30 days of notification, and the assessment must be made within the period allowed for the original penalty. Alternatively it can be included in a contract settlement.

Paragraph 8 allows an appeal only against the decision that the penalty is payable, and the tribunal can affirm or cancel it. Because the amount is a fixed 50%, the way to reduce it is to challenge the original penalty, for example its behaviour finding or disclosure reduction. Grounds against liability include that the original penalty was not for deliberate behaviour, that the destination was a specified territory at the time, that beneficial ownership ended, or that the purpose condition is not met.

What mistakes do people make?

• Checking today’s territory list rather than the list in force on the date of the move.
• Overlooking ownership changes. Wrapping assets in a structure while keeping the benefit can be a move without any transfer abroad.
• Treating it as part of the offshore penalty categories. It sits on top of the category 1, 2 or 3 penalty, not instead of it.
• Assuming that coming forward through the Worldwide Disclosure Facility removes it. A good disclosure lowers the original penalty, and so the 50% addition, but does not undo a move made to hide the money.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

• The asset based penalty for offshore evasion
• Exit charges when a company moves abroad
• Off payroll rules: when the tax debt moves up the chain
• Qualifying asset holding companies explained
• Asset turnover ratio

Sources

• legislation.gov.uk: Act 2015 c. 11, schedule 21
• legislation.gov.uk: SI 2015/866
• legislation.gov.uk: SI 2024/1195
• legislation.gov.uk: SI 2015/866
• GOV.UK: Manual page CH119100
• GOV.UK: Manual page CH119200
• GOV.UK: Manual page CH123050
• GOV.UK: Original requirement to correct guidance
• GOV.UK: Compliance checks penalties for offshore non compliance ccfs17

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.