Enabler liability is no longer fit for purpose: what trust lawyers, trustees and company providers face

Enabler liability under the Trustee Act 1925, Trustee Act 2000, Limitation Act 1980, Proceeds of Crime Act 2002, Money Laundering Regulations 2017 and Economic Crime and Corporate Transparency Act 2023. Seven fixes for trust lawyers, trustees and TCSPs.

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Charles Pycraft · November 2026 · London

Cover card: Enabler liability. Navy ground with a gold chain of links, the middle link open, above a small gold shield. Labelled Trustee Act 2000, small CP mark. By Charles Pycraft

This article is part of Offshore: the enabler chain. It sits in pillar 2: Why the watchdogs miss it, after Professional-body AML supervision is no longer fit for purpose. Start with the series overview if you are new to the work.

Opinion. Updated on 13 November 2026.

The short version

Earlier pieces describe the quiet desk, the tax-free pitch and the regulators who watch them. When a trust lawyer, a professional trustee, a trust or company service provider (TCSP) or another adviser helps abuse happen, what consequence follows, and who receives it?

A beneficiary or other claimant may have a civil claim, subject to the applicable time limit and the cost of bringing it. Regulatory fines and compensation are generally separate routes. The failure to prevent fraud offence is centred on large organisations and can also reach certain smaller subsidiaries. In my view, those rules leave too wide a gap between sanctioning misconduct and compensating people who suffer a loss.

Holding money or a trust offshore is not itself unlawful. No person or firm is accused of anything.

Why consequence matters to honest professionals

Trust lawyers, trustees and company administrators who check instructions carefully and turn down work they cannot justify incur real costs. In my view, consistent enforcement matters to those professionals because it reduces the advantage of cutting corners.

Trustee liability and breach of trust: what a victim can claim

Against a trustee. In England and Wales, a trustee may be personally liable for loss caused by a breach of trust. Section 1 of the Trustee Act 2000 requires reasonable care and skill when the statutory duty applies, including to investment functions listed in Schedule 1. The standard takes account of any special knowledge or experience the trustee has or holds themselves out as having, and of what can reasonably be expected of a trustee acting in that kind of business or profession. Under paragraph 7 of Schedule 1, the duty applies only to the extent that the trust instrument leaves it in place.

In Armitage v Nurse [1998] Ch 241, the Court of Appeal held that a clause can exclude a trustee's liability even for gross negligence, while the core duty to act honestly and in good faith cannot be excluded. The Law Commission's 2006 report, Trustee Exemption Clauses (Law Com No 301), did not recommend legislation. It recommended a rule of practice under which a paid trustee who causes a clause limiting or excluding liability for negligence to be included should take reasonable steps before the trust is created to make the settlor aware of its meaning and effect. It recommended that professional bodies extend the rule to trust drafters. On 14 September 2010 the government said it would promote wider adoption. A valid clause can still restrict a beneficiary's remedy.

Jersey takes a different line: under Article 30(10) of the Trusts (Jersey) Law 1984, a trust's terms cannot relieve a trustee of liability for the trustee's own fraud, wilful misconduct or gross negligence.

Section 61 of the Trustee Act 1925 lets a court relieve a trustee wholly or partly if the trustee "acted honestly and reasonably, and ought fairly to be excused" for the breach and for omitting to obtain the court's directions.

Against the adviser who helped. A lawyer, company provider or bank that is not the trustee can be liable for dishonest assistance in a breach of trust, or for knowing receipt of trust property. Dishonest assistance requires dishonest participation in a breach. Knowing receipt requires beneficial receipt of trust property in which the claimant retains an equitable interest, and knowledge that makes it unconscionable for the recipient to retain the benefit.

The clock. Section 21(1) of the Limitation Act 1980 sets no limitation period for a beneficiary's action against a trustee in respect of fraud or a fraudulent breach of trust to which the trustee was a party or privy. Section 21(1) also removes the statutory time limit for certain claims to recover trust property or its proceeds from the trustee. Subject to the Act's exceptions, section 21(3) generally allows six years for a beneficiary's claim for breach of trust or to recover trust property. In Williams v Central Bank of Nigeria [2014] UKSC 10, the Supreme Court held that a third party liable as a dishonest assister or knowing recipient does not qualify as a trustee for the exceptions in section 21(1). Six years will ordinarily apply to those claims, subject to postponement under section 32 where its conditions are met. In my view, that difference can leave a beneficiary able to pursue a trustee for a fraudulent breach after the claim against an adviser has become time-barred.

What the AML rules do not give. The Money Laundering Regulations 2017 give a person who suffers loss no express right to sue for breach of the Regulations. They impose no general requirement to hold professional indemnity insurance. Existing civil claims and insurance duties under separate professional rules, including the SRA's rules for authorised firms, can still apply.

Regulatory fines: SRA, SDT and AML penalties

Solicitors. The Solicitors Regulation Authority (SRA) ordinarily has a £25,000 fining limit for solicitors and traditional law firms under section 44D of the Solicitors Act 1974 and the parallel provisions for recognised bodies and practices. Since 4 March 2024, section 207 of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) has removed that ceiling for breaches of rules specifically aimed at preventing or detecting economic crime, and for breaches or misconduct that impede its prevention or detection. Alternative business structures are subject to separate limits.

The SRA's AML report for 2025/26, published on 22 October 2026, records 14 fines by SRA adjudicators totalling £363,726, 145 regulatory settlement agreements totalling £2,003,759, and eight outcomes at the Solicitors Disciplinary Tribunal (SDT): six fines totalling £228,000, one suspension and one strike-off. The SRA states that all fines received are paid to HM Treasury. The wider disciplinary record is in the SRA and Legal Ombudsman piece.

Trust and company service providers. Regulation 76 of the Money Laundering Regulations 2017 gives the Financial Conduct Authority (FCA) and HMRC powers to impose effective, proportionate and dissuasive penalties for breaches of specified requirements, including on an officer knowingly concerned in a breach under paragraph (3). Professional bodies can use their own disciplinary powers. A breach of a specified requirement can also be an offence under regulation 86, punishable on indictment by up to two years' imprisonment, a fine or both. The regulation provides a defence where the person took all reasonable steps and exercised all due diligence. HM Treasury's supervision report for 2024-25, published in December 2025, records that HMRC issued 19 fines amounting to approximately £132,000 to businesses acting as TCSPs and cancelled one registration. Professional body supervisors issued 166 fines amounting to over £1 million to TCSPs, cancelled 21 memberships and suspended seven. The professional-body AML piece covers how supervision is organised.

Tax penalties for enablers and promoters

The HMRC piece covers the offshore enabler penalty in Schedule 20 to the Finance Act 2016. HMRC reported a provisional count of zero Schedule 20 penalties since 2018-19 in its letter of 26 June 2025. The Public Accounts Committee reported that finding in July 2025. In June 2026 the Treasury said HMRC was reviewing possible cases, with an update to the Committee targeted for autumn 2026, and that HMRC did not intend to set an annual target. I found no published follow-up on Schedule 20 by 13 November 2026.

Under Schedule 16 to the Finance (No. 2) Act 2017, the starting penalty for enabling defeated abusive tax avoidance is the value of the relevant consideration received or receivable. HMRC may publish an enabler's details where the statutory conditions are met. Since 22 February 2024, continuing to promote arrangements in breach of a stop notice without reasonable excuse has been an offence punishable on indictment by an unlimited fine, up to two years' imprisonment or both (Finance Act 2024, section 34). Schedule 13 allows HMRC to apply for disqualification of directors of qualifying promoter companies for up to 15 years.

For acts or omissions from 1 April 2026, Schedule 22 to the Finance Act 2026 allows HMRC, after issuing a conduct notice, to charge a first penalty of up to £1 million where a tax adviser acts or fails to act in that capacity intending to cause a loss of tax revenue. In May 2026, the Act's ban on promoting certain tax avoidance arrangements took effect, backed by a criminal offence under section 163. Sections 209 to 215 also replaced specific privilege exemptions in three HMRC publication provisions with a process allowing lawyers to support representations by declaration without disclosing the contents of privileged communications. The changes to those exemptions apply to conduct from 18 March 2026.

Criminal liability: money laundering and failure to prevent fraud

The principal money laundering offences in sections 327 to 329 of the Proceeds of Crime Act 2002 (POCA) carry up to 14 years' imprisonment on indictment. They cover conduct including concealing criminal property, entering into arrangements involving it, and acquiring, using or possessing it. Failure to make a required disclosure under section 330 carries up to five years on indictment. The duty can arise in the regulated sector where there is knowledge, suspicion or reasonable grounds for either, subject to the statutory conditions and exceptions.

Since 30 September 2017, sections 45 and 46 of the Criminal Finances Act 2017 have made it an offence for a company or partnership to fail to prevent the facilitation of UK or foreign tax evasion, subject to the statutory prevention-procedures defence. Conviction on indictment can carry an unlimited fine. The HMRC piece covers the charging record. From 1 September 2025, section 199 of ECCTA has applied where an associated person commits a specified fraud intending to benefit the organisation or, in relevant cases, its client, subject to the statutory defences. Sections 201 and 202 generally require two of three thresholds to be exceeded in the preceding financial year: £36 million turnover, £18 million balance sheet total and 250 employees. Group rules apply, and section 199(2) can reach smaller subsidiaries of large parent undertakings. A small independent TCSP can fall outside those rules. Since 29 June 2026, section 250 of the Crime and Policing Act 2026 has attributed offences under UK law to a body corporate or partnership where a senior manager commits them within the actual or apparent scope of their authority, subject to a territorial exception. It replaced the narrower economic crime rule in section 196 of ECCTA, which took effect on 26 December 2023.

Where the money goes

Penalties under sections 44D and 47 of the Solicitors Act 1974 are forfeited to the Crown. A penalty under regulation 76 is payable to the FCA or HMRC, whichever imposed it. A person seeking redress may have a civil claim or qualify for a separate route, such as the Legal Ombudsman or the SRA Compensation Fund.

Who pays when asset recovery fails follows that cost to the taxpayer and the victim.

Why this reading says "no longer fit for purpose"

The SRA's published AML figures total about £2.6 million across adjudicator fines, regulatory settlement agreements and SDT fines in 2025/26, up from about £1.5 million in 2024/25. The SRA says the fines it receives go to HM Treasury. In my view, a regime in which a trustee may rely on an exemption clause or obtain relief from the court, and a claim against a third party may be time-barred, leaves too wide a gap between enforcement and redress.

What should change

  1. A statutory claim for victims against regulated enablers. Create a statutory right for a private person to claim against an in-scope business where breach of a specified Money Laundering Regulations duty caused or materially contributed to the loss. Use section 138D of the Financial Services and Markets Act 2000 as a model. Owner: HM Treasury and Parliament could take this forward through a new clause in the Financial Services and Markets Bill [HL].
  2. Fines that reach victims. Where a final finding establishes that the sanctioned conduct caused an identifiable loss, give the decision-maker power to direct penalty receipts to the victim up to the unpaid amount of that loss. Owner: the Ministry of Justice, HM Treasury and Parliament should create the power, amend the relevant solicitors' penalty provisions and align regulations 76(7) and 102 of the Money Laundering Regulations. The SRA, SDT, FCA and HMRC would apply the new rules within their respective powers.
  3. Cap exemption clauses for paid trustees. Legislate in England and Wales so trust terms cannot exclude or limit a paid trustee's liability for breach of trust arising from that trustee's own gross negligence. Use Jersey's protection as a model. Owner: the Ministry of Justice and Parliament, with a Law Commission review if commissioned.
  4. Equal time for the helper. Amend section 21(1)(a) of the Limitation Act 1980 so its exception for fraud or fraudulent breach of trust also covers a beneficiary's claim for dishonest assistance in the same breach or for knowing receipt of property transferred through it. Owner: Ministry of Justice, Parliament.
  5. Insurance that responds. Require in-scope TCSPs and professional trustees to carry indemnity insurance with minimum terms for covered civil liabilities to beneficiaries and other eligible claimants. Owner: HM Treasury should set the scope and secure the necessary legal powers. The FCA should administer the requirement for firms it takes on. Any extension to professional trustees outside AML supervision would need a separate legal basis.
  6. Personal consequence, published. The FCA and HMRC should use regulation 76(3), where they have jurisdiction, against officers knowingly concerned in a breach of a specified requirement. Owner: HM Treasury should establish a single public register drawing on publishable final sanctions from the FCA, HMRC, SRA, SDT and professional bodies, with rules for appeal outcomes, corrections and removal.
  7. Extend failure to prevent fraud to smaller regulated firms. Extend section 199 to bodies corporate and partnerships supervised under the Money Laundering Regulations, whatever their size, while retaining its existing coverage. Owner: the Home Office should bring forward a targeted amendment for Parliament. Section 201(6) allows ministers to change the definition of a large organisation, and section 201(7) allows them to remove the size condition generally.

A note on records

Partisan issues dated receipts for file fingerprints that can be compared with the fingerprint of a later copy. I work on business development and communications for Partisan.

About this piece

Public sources only, as linked. Case law is cited for legal principle only. It makes no allegations about any person or firm, and it does not concern any private dispute. Holding money or a trust offshore is not itself unlawful. Opinion is marked as argued reading. This piece is for general information and is not legal advice.

Previous: Professional-body AML supervision is no longer fit for purpose

Next: Companies House identity checks: enforcement is no longer fit for purpose

Related: The SRA and the Legal Ombudsman are no longer fit for purpose; HMRC is no longer fit for purpose on serious offshore evasion; Who pays when asset recovery fails

Series overview: Offshore: the enabler chain

Sources

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