Corporate Criminal Tax Offences

These two offences are complicated to prosecute because they first require there to be two underlying tax offences – the tax evasion itself, plus the offence of being knowingly involved in or taking steps with a view to the fraudulent evasion of tax by another person, i.e. the facilitation offence.

These two underlying offences can each be very difficult to prove on their own. It may be that – except in cases where the evidence is clear or the tax evasion is admitted – these two new offences will be unlikely to lead to prosecutions and may serve more as a “keep off the grass” warning to corporates.

To be safe, companies and partnerships need to have solid tax evasion facilitation prevention procedures in place. HMRC guidance suggests six guiding principles:

• Risk assessment – has there been a business-wide risk assessment to identify associated parties who might facilitate tax evasion, and where are such tax evasion and facilitation likely to take place?
• Proportionality – are the prevention procedures in place proportionate to the risks, and are further procedures appropriate for specific areas of business?
• Top-level commitment – senior management should be committed to preventing persons associated with the business from facilitating tax evasion and foster the necessary culture.
• Due diligence – the business should apply due diligence procedures in order to mitigate the risks of associates facilitating tax evasion.
• Communication, including training – the business’s prevention policies and procedures should be communicated, embedded and understood throughout the organisation.
• Monitoring and review – the business monitors and reviews its prevention procedures and improves them when necessary.

HMRC has published guidance on self-reporting tax evasion facilitation offences. By self-reporting, the company or partnership can use that as part of its “reasonable procedures” defence.

If the business is prosecuted, prosecutors will take such a report into account and it may assist in mitigating penalties.

If a successful prosecution for either offence is made out, the company or partnership faces an unlimited fine and ancillary orders such as confiscation or serious crime prevention orders.

If your organisation is at risk of exposure to these offences or would like advice on whether its prevention procedures are reasonable in the circumstances, please contact Patrick Cannon for an initial discussion or advice.