Offshore Enabler Penalties

Penalties for enablers of offshore non-compliance introduced in Finance Act 2016 have now been effective for more than 2 years.

The penalties are potentially very wide-ranging, applying in any circumstances where a person ‘enables’ offshore non-compliance. Enabling includes encouraging, assisting or otherwise facilitating, and offshore non-compliance goes beyond deliberate non-compliance to include any circumstances where a person incurs a penalty under Schedule 24 Finance Act 2007, including for carelessness.

The regime is civil in nature and mirrors in many respects the Corporate Criminal Offence regime which has been the subject to considerable comment. These civil rules have been the subject of less comment and, unfortunately, much less meaningful guidance. However, it is also much more likely that they will be applied than the criminal rules as a result of the lower standard of proof required.

Given the timing of the introduction of the offence, it’s likely that these penalties will only now be coming onto the radar of advisers and intermediaries. This is because the rules apply where there has been offshore non-compliance after 1 January 2017, so the first tax years which will be impacted will be 2016/17, in respect of which enquiries may only recently have been opened.

There are a number of tricky issues for advisers to consider in connection with these penalties, in particular the possibility of professional conflicts which will need to be managed.

My recent article in Tax Adviser magazine (https://www.taxadvisermagazine.com/article/risky-waters) contains more detail. If you’d like to discuss the implications of the regime in more detail, please let me know.