The Criminal Finances Act, which came into force on 30 September 2017, made companies and partnerships criminally liable where they fail to prevent those who act for, (or on behalf of), businesses from criminally facilitating tax evasion. The offence not only concerns tax evasion in the UK but includes foreign countries as well.
Corporations are expected to implement reasonable procedures to prevent associated persons from criminally facilitating tax evasion and, where they fail to, they are criminally liable. Convictions may result in harsh penalties of an unlimited fine.
HMRC has released information to demonstrate they are actively pursuing companies to review and investigate whether charges should be made. The agency has looked at hundreds of companies so far and, where they are satisfied the company had not deliberately facilitated tax evasion, their interest has fallen away.
There are currently nine live investigations, with a further 26 companies under review for potential investigation. HMRC has not yet made the decision to charge any companies whilst they are still conducting their investigations.
Over recent years, the UK government has ramped up efforts to tackle economic crime in different ways, including unexplained wealth orders, the upcoming Economic Crime and Corporate Transparency Bill, anti-money laundering (AML) regulations, and more.
Whilst convictions and fines serve as a reminder to the public that they should ensure their businesses are not involved in facilitating tax evasion, there needs to be a shift in behavior change to prevention rather than reaction.
Of course, it is a 'chicken and egg' situation, where companies may not actively do more until there are examples in the public to serve as a deterrent.
Please do get in touch if you or your business needs advice on any of the topics addressed.