A reminder for practitioners that the new sanctions applied to so-called enablers of off-shore tax evasion came in to effect on 1 January 2017. We have reproduced below an extract of the recent announcement published by HMRC. The announcement by HMRC includes information about further legislation being contemplated later this year – a new corporate offence of failing to prevent the facilitation of tax evasion.
Accountants, bankers, lawyers and other advisors who enable offshore tax evasion will face tough new sanctions from 1 January 2017.
The new powers will see individuals or corporates who take deliberate action to help others evade paying tax facing fines of up to 100% of the tax they helped evade or £3000, whichever is highest. On top of this the taxman will also be able to publicly name the enabler.
While tax evasion has always been illegal, this law will mean HMRC can, for the first time, charge civil penalties on the facilitators of the tax evasion who provide planning, advice or other professional services or physically move funds offshore.
The UK is one of the first countries in the world to introduce this power, which was originally announced at Budget 2015 and legislated for in the Finance Bill 2016.
This year will also see the government introduce a new corporate criminal offence of failing to prevent the facilitation of tax evasion. Under the new rule currently being legislated for, companies will be held liable if an individual acting on its behalf as an employee or contractor facilitates tax evasion. Previously there needed to be proof that the board of directors were aware and involved in facilitating the evasion.
This is alongside introducing a new requirement to correct past tax evasion, which will see anyone who has failed to correct past evaded taxes by 30 September 2018 hit with tough new penalties, and consulting on a new requirement for businesses and individuals who create complex offshore financial arrangements that bear the hallmarks of enabling tax evasion to notify them to HMRC.
Hopefully, this legislation will apply to larger corporate tax evasion and not to the directors of smaller businesses who simply want to make the most of the opportunities offered by the tax system – taking lower salaries and higher dividends for example. Only time will tell…