HMRC have published a new factsheet CC/FS17a explaining penalties for enablers of offshore tax evasion or non-compliance. Here we take a look at what is included.

HMRC can apply penalties if the person concerned has encouraged, assisted or otherwise facilitated another
person to carry out offshore tax evasion or non-compliance if the person concered knew that their actions enabled, or were likely to enable, another person to carry out offshore tax evasion or non-compliance. A person carries out offshore tax evasion or non-compliance if either:

  • they commit a relevant offence
  • their actions make them liable to a relevant civil penalty relating to income tax, capital gains tax or inheritance tax

and if the the person carrying out the offshore tax evasion or non-compliance either:

  • has been convicted of a relevant offence and the conviction is final
  • is liable to a relevant penalty and the penalty is final

or if  is also met if HMRC has entered into and agreed a contract settlement with the person
carrying out the offshore tax evasion or non-compliance. This is in place of assessing a penalty or taking
proceedings to recover such a penalty.

The type of offences HMRC will issue penalties for include:

  • cheating the public revenue involving offshore activity
  • fraudulent evasion of income tax involving offshore activity
  • being chargeable to income tax or capital gains tax on or by reference to offshore income, assets or liabilities, where the person has:
    • failed to give notice of being chargeable to tax
    • failed to deliver a return
    • made an inaccurate return

How the penalty is calculated:

The maximum penalty for all cases except where the enabler penalty relates to an offshore asset move is calculated by using the original amount of Potential Lost Revenue (PLR) used. The maximum penalty is the higher of either:

  • 100% of the PLR
  • £3,000

In the case where the enabler penalty relates to an offshore asset move, HMRC use 50% of the original amount
of PLR. This is the PLR used to apply a penalty to the person who carried out the offshore tax evasion or
non-compliance. The maximum penalty for an enabler of an offshore asset move is the higher of either:

  • 50% of the PLR
  • £3,000

Where offences include offshore tax evasion and an offshore asset move, an enabler may be charged
both types of penalty shown above. This means they may be charged a standard penalty for enabling
another person to carry out offshore tax evasion or non-compliance and also a separate offshore asset
move penalty.

Circumstances when penalties maybe reduced:

HMRC may reduce the penalty depending on:

  • whether the disclosure is prompted or unprompted
  • the quality of the disclosure
  • whether a special reduction is due.

The circumstances under which HMRC will consider making such a reduction are complicated. We suggest you always take professional advice if you are looking to make a disclosure to HMRC or are pursuing settlement of historic tax planning arrangements. To find out more about how we can assist take a look at our settlement pages on this website or give us a call today.

Further details about HMRC’s approach to enabler penalties can be found on the .Gov website.

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