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HMRC internal manual

Compliance Handbook

Offshore matters: penalties for enablers of offshore tax evasion or non-compliance: conditions to be met for a penalty to apply

Conditions A and B must both be met for a penalty to apply under Schedule 20 FA2016.

Condition A is met where a person knew that when their actions were carried out, those actions enabled, or were likely to enable, another person to carry out offshore tax evasion or non-compliance.

Condition B is met where

  • a person has been convicted of a relevant offence and the conviction is final, see CH124300, or
  • a person is liable to a relevant penalty and the penalty is final, see CH124300, or
  • a contract settlement has been reached under which the Commissioners undertake not to assess a relevant penalty or seek recovery if already assessed.

A relevant offence or a penalty becomes final when the appeal deadline has passed, or any appeal is determined.

Condition A will only be met if the relevant offence has been committed and this is final. So, condition A will not be met if, for example, the enabler put in place the framework for offshore tax evasion or non-compliance but the person was not convicted of using the advice, scheme or framework to commit the offshore evasion or non-compliance (FA16/Sch20/Para1(7a)).

Condition B can still be met if the relevant offence or relevant penalty also relates to other tax evasion or non-compliance that is not offshore (FA16/Sch20/Para1(9)).

Relevant offences include criminal and civil conduct by the person carrying out offshore tax evasion or non-compliance. Amendments to TMA70 at S106 sets out the relevant offences that are subject to criminal procedure. A person who has encouraged, assisted or otherwise facilitated a person to commit a relevant offence will have met condition A.

If a person has been found to have committed a relevant offence or liable to relevant penalty it is not, by itself, considered evidence in determining if condition A is met (FA16/Sch20/Para1(11)).