NOTE 8 – INCOME TAXES

A roll-forward of unrecognized tax benefits is as follows:


(in millions)	September 30, 2018			December 31, 2017
.
Opening balance at January 1	$	2.2		$	2.2
Additions for tax positions of prior periods		0.9			0.5
Reductions due to lapsed statute of limitations		(0.5	)		(0.5	)

Closing balance	$	2.6		$	2.2

We recognize accrued interest and penalties associated with unrecognized tax benefits as part of income taxes in our condensed consolidated statements of income. Related to the unrecognized tax benefits noted above, we have also accrued a net increase in interest and penalties of $0.3 million during the first nine months of 2018, and a net increase in interest and penalties of $0.2 million in 2017. Total accrued interest and penalties at September 30, 2018 on all remaining unrecognized tax benefits amounted to $0.6 million (December 31, 2017 – $0.3 million).

All of the $3.2 million of unrecognized tax benefits, interest and penalties, would impact our effective tax rate if recognized.

The Company or one of its subsidiaries files income tax returns with the U.S. federal government, and various state and foreign jurisdictions. As previously disclosed, tax audits have been opened by the Italian tax authorities in respect of Innospec Performance Chemicals Italia Srl, acquired by the Company as part of the Huntsman business acquisition in 2016 and relating to the period 2011 to 2013 inclusive. In the fourth quarter of 2017, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2011 tax audit. In the first quarter of 2018, the Company recorded an unrecognized tax benefit of $0.4 million, together with associated interest of $0.1 million in relation to the 2012 tax audit. In the third quarter of 2018, the Company recorded an unrecognized tax benefit of $0.5 million, together with associated interest of $0.2 million in relation to the 2013 tax audit. As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, the Company has recorded an indemnification non-current asset of the same amount as the unrecognized tax benefit and associated interest to reflect the fact that the final liability would be reimbursed by the previous owner.

The Company and its U.S. subsidiaries remain open to examination by the IRS for years 2015 onwards under the statute of limitations. The Company’s subsidiaries in foreign tax jurisdictions are open to examination including France (2014 onwards), Germany (2015 onwards), Switzerland (2015 onwards) and the United Kingdom (2016 onwards).