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Enabling Tax Non-Compliance

There are hundreds of thousands of companies in tax havens and the true commercial value added by them is probably trivial, whereas the tax avoided or evaded runs into billions, so it is no wonder that governments are mounting an ever-increasing effort to deal with the use of offshore jurisdictions as a vehicle for 'non-compliance' (the euphemism favoured for describing tax evasion) with their tax laws.

Some of the steps taken by the UK Government (several tax havens are British) are aimed at the professionals who assist with such non-compliance, termed 'enablers'. There are both criminal and civil sanctions for facilitating or failing to prevent the facilitation of tax evasion.

HM Revenue and Customs (HMRC) are more likely to use the civil regime to seek redress, since the burden of proof is less onerous ('balance of probabilities' rather than 'beyond a reasonable doubt'). The penalties an enabler faces can be up to 100 per cent of the revenue lost to the Exchequer. In addition, HMRC have the right to publicly name and shame the firm involved in most circumstances.

The legislation bites even where an enabler turns a blind eye to their client's actions, as it will catch those situations in which the enabler is aware that their conduct is likely to facilitate the non-compliance as well as those in which the non-compliance is enabled.