Firms warned as Corporate Criminal Offence legislation comes into force at end of month

13/09/2017 News Team

With the Corporate Criminal Offence of failure to prevent facilitation of tax evasion coming into force at the end of this month, James Egert, head of tax risk at BDO London, has warned firms to be aware of the pitfalls surrounding it.

The new legislation, which was introduced as part of the Criminal Finances Act at the end of April 2017, comes into force on 30 September 2017. The legislation (which has no de minimis) could result in an unlimited fine and criminal prosecution for organisations that fail to prevent associated persons from facilitating tax evasion.

Based on the UK Bribery Act 2010, Mr Egert said the aim of the legislation was to overcome the difficulties in attributing criminal liability to corporates when their employees, contractors and other ‘associated persons’ are seen to be facilitating tax evasion by a taxpayer.

“Examples of where this could happen within your own organisation could include someone in HR or payroll deliberately and dishonestly assisting someone else in the company evade tax by – for example - paying part of the salary ‘off the books’, or someone in accounts falsifying or dishonestly updating invoices to facilitate tax evasion for a third party in the supply chain,” Mr Egert explained.  

“The offence is not just focused on facilitation of tax evasion in the UK. As HMRC states, ‘it would also be wrong for a UK-based relevant body to escape liability for acts which, if they were in relation to UK tax would be criminal, just because the country suffering the tax loss is unable to bring an action against that relevant body within that jurisdiction’s legal system’. As such, the legislation also makes it an offence where certain relevant bodies (with a UK nexus) failure to prevent the facilitation of tax evasion in other jurisdictions.”  

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