The Penalties for Enablers of Defeated Tax Avoidance (Legally Privileged Communications Declarations) Regulations 2017

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations are made further to the provisions contained in Schedule 16 (“the Schedule”) to the Finance Act (No. 2) 2017. The Schedule makes provision for a penalty for any person who enables a taxpayer to enter into abusive tax arrangements that are defeated. Paragraphs 8 to 12 of the Schedule contain the definitions of an enabler. A potential enabler who is a relevant lawyer (as defined in the Schedule), or a relevant lawyer acting on their behalf, may be unable to provide information in defence of a penalty because communications made by them, or on their behalf by a relevant lawyer, may be the subject of a claim to legal professional privilege or, in Scotland, protected from disclosure in legal proceedings on the grounds of confidentiality of communication. These regulations, made under paragraph 44(4) of the Schedule, make provision that in such circumstances a relevant lawyer may make a declaration that the communications in question demonstrate that the person potentially liable for a penalty is not an enabler within the meaning of any of paragraphs 8 to 12 of the Schedule without requiring them to breach legal professional privilege.

Regulation 1 provides for citation and commencement.

Regulation 2 provides for interpretation of a reference to a numbered paragraph to be to a paragraph of the Schedule which is so numbered.

Regulation 3 states that the information contained within Conditions A, B and C must be provided by the relevant lawyer and makes provision for the form and content of a declaration to ensure that it does not cause the relevant lawyer making the declaration to breach legal professional privilege.

Regulation 4 contains Condition A which states that a declaration must identify the person who would otherwise be liable to a penalty under paragraph 1 of the Schedule; the relevant lawyer making the declaration; the relevant lawyer or lawyers whose communications are privileged; and the proposal for arrangements which the arrangements referred to in paragraph 1 of the Schedule implement.

Regulation 5 contains Condition B which states that the person making the declaration must provide the confirmations described in regulations 6 to 10.

Regulations 6 to 10 require the relevant lawyer to confirm that at least one of the items listed in each of those regulations apply to prevent the person referred to in regulation 4(a) falling within the meaning of an enabler.

Regulation 11 contains Condition C which states the relevant lawyer making the declaration must certify that the information that is being provided is correct to the best of their knowledge and belief, and that they understand that the potential enabler and any person referred to in regulation 4 may have to pay a financial penalty and that any person named in the declaration may face prosecution for providing false information.

Regulation 12 makes provision for a declaration to include, if appropriate, confirmation that a proposal for arrangements was implemented more than once by arrangements which are substantially similar and that the involvement of the person referred to in regulation 4(a) in respect of those arrangements was such that all the things stated in the declaration are equally true in relation to those arrangements.

A Tax Information and Impact Note covering this instrument was published on 5 December 2016 alongside the Autumn Statement 2016 and is available on the GOV.UK website at https://www.gov.uk/government/publications/strengthening-sanctions-and-deterrents-for-tax-avoidance/strengthening-sanctions-and-deterrents-for-tax-avoidance. It remains an accurate summary of the impacts that apply to this instrument.