UK introduces new penalties for “enablers of offshore tax evasion”

1 January 2017, the UK government introduced new civil penalties for the facilitators of the tax evasion who provide planning, advice or other professional services or physically move funds offshore. HMRC will also be able to name the enabler publicly.

The Treasury said the government’s new powers would see individuals or firms who take deliberate action to help others evade paying tax facing fines of up to 100% of the tax they helped evade or £3,000, whichever is highest.
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.

Financial Secretary to the Treasury, Jane Ellison said: “Tax evasion is a crime and as a government we have led reform of the international tax system to root it out. Closer to home we are creating a tax system where taxes are fair, competitive and paid.”

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, which is currently being legislated, 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.

It will also introduce a new requirement to correct past tax evasion, which will see anyone who has failed to correct past evaded taxes by 30 September 2018 liable to new penalties, and is 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.

Since 2010, HMRC has secured over £130 billion in additional compliance revenues as a result of actions to tackle tax evasion, tax avoidance and non-compliance. It has also secured more than £2.5 billion specifically from offshore tax evaders.