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The UK Legal Entities

UK | New penalties for the enablers of offshore tax evasion

On the 1st of January 2017, the UK government proceeded to the introduction of new civil penalties for the facilitators of the tax evasion. This means that professionals, such as accountants, bankers, lawyers, tax planning advisors may be subject to sanctions, if they enable tax evasion.

Firms and individuals, “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.” In addition to this, HMRC will also be able to publicly name the enabler.The UK is one of the first countries in the world to introduce this power.

Furthermore, in 2017 the UK government is planning to introduce a new corporate criminal offence of failing to prevent the facilitation of tax evasion. According to 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.

Moreover, a new requirement is expected to be introduced in order to correct past tax evasion: Anyone who has failed to correct past evaded taxes by 30 September 2018 will be liable to new penalties. Last but not least, the UK government is currently consulting on a new requirement for legal entities and individuals who are involved in the creation of complex offshore financial arrangements bearing the hallmarks of enabling tax evasion to notify them to the tax authorities.