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FOCUS CORPORATE CRIMINAL OFFENCE


It’s time to take evasive action


Companies and partnerships of all sizes could be prosecuted if they can’t show that they’ve taken adequate steps to prevent anyone associated with them from carrying out tax evasion. HMRC says it expects businesses to introduce specific processes to stop it happening – so what can you do to safeguard against potential criminal prosecution and a hefty fine?


By James Paterson, Partner, BDO LLP


A


lthough the rules about tax evasion attracted plenty of media attention when they were introduced in September 2017, things inevitably went


quiet as the rules bedded in. However, HMRC has now made it clear that it intends to focus on this area – so if you’ve not yet done anything, it’s time to take action now.


The rules were introduced against


a backdrop of increasing focus on tax issues by the media, UK Government and the public at large. Although aggressive tax planning can be legal, it is increasingly seen as morally questionable, if not objectionable,


by many; illegal tax evasion, which may have been tolerated by some in the past, is now rightly viewed as completely unacceptable in most quarters.


Te offence


There are in fact two offences, the domestic offence and the overseas offence, but both are referred to as the Corporate Criminal Offence (CCO). The rules are concerned solely with tax evasion and are designed to overcome the difficulties which had previously been faced by the authorities in holding businesses to account where their ‘associated persons’ had facilitated tax evasion. ‘Associated persons’ embraces a wide range of people, but broadly includes employees, agents,


34 CABLEtalk DECEMBER 2019/JANUARY 2020


contractors and potentially third-party suppliers. To prosecute a business under the CCO rules, HMRC must prove three tests are met: 1. Criminal tax evasion (of UK tax for the domestic offence, or overseas tax for the overseas offence, in which case the actions must amount to a criminal offence both in the relevant country and in the UK), or attempted tax evasion. 2. Criminal facilitation of this offence


by an associated person of the business (and again, the overseas offence requires the actions to amount to a criminal offence both here and overseas). 3. The failure of the business to put in place reasonable procedures to prevent facilitation of tax evasion by its associated persons.


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