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 $0.9 million during the first nine months of 2019, and a net increase in interest and penalties of $0.3 million in 2018. Total accrued interest and penalties at September 30, 2019 on all remaining unrecognized tax benefits amounted to $1.5 million (December 31, 2018 – $0.6 million).

All of the $14.9 million of unrecognized tax benefits, interest and penalties, would impact our effective tax rate if recognized.

As previously disclosed, tax audits have been opened by the Italian tax authorities in respect of Innospec Performance Chemicals Italia Srl, acquired as part of the Huntsman business, in relation to the period 2011 to 2013 inclusive. The Company believes that additional tax of approximately $0.5 million, together with associated interest of $0.2 million, may arise as a result of the 2011 audit. This amount was recorded at December 31, 2017. During 2018, the Company determined that additional tax of approximately $0.9 million, together with associated interest of $0.3 million, may arise as a result of the 2012 and 2013 audits collectively. Additional interest of $0.1 million

has been recorded in the nine months to September 30, 2019. During the third quarter of 2019 the Italian Tax Authorities opened a tax audit into the 2014 accounting period. As this is currently limited to information gathering and no tax has been assessed the unrecognized tax benefits have not been updated as a result of the 2014 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, an unrecognized tax benefit of $

2.0

million is recorded, together with an indemnification asset of the same amount to reflect the fact that the final liability would be reimbursed by the previous owner.

In the fourth quarter of 2018, the Company recorded an unrecognized tax benefit of $10.8 million. This portion primarily relates to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act, but for which retrospective adjustment to the filed 2017 U.S. federal income tax returns was not permissible. The Company accrued a net increase in interest of $0.7 million in the first nine months of 2019 relating to this matter.

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 Spain (

2014

onwards), Italy (2013 onwards), France (

2016

onwards), Germany (

2014

onwards), Switzerland (

2014

onwards) and the United Kingdom (

2017

onwards).