What Is Criminal Facilitation of Tax Evasion

Because of this “double criminality” requirement, it is only necessary to have an understanding of foreign criminal law when you do something that would be illegal if it were done in the UK. If the related person`s actions were lawful in the UK, the requirement of “dual criminality” will not be met and the new foreign tax offence will not be committed, regardless of foreign law. For this reason, the government believes that it should not be overly burdensome for companies to put in place “adequate preventive procedures” in relation to foreign tax evasion for the purposes of this crime. The aim of the legislation is to require companies to put in place appropriate procedures to prevent those who provide services for or on their behalf from deliberately and dishonestly facilitating tax evasion, and this will be the case regardless of whether the tax evaded is due in the UK or abroad. However, the new offences do not broaden the scope of tax evasion, but aim to change who can be held responsible for facilitating tax evasion, making it easier to take action against the company in question. The law obliges the Federal Chancellor to draw up and publish guidelines on the procedures that the competent authorities must put in place to prevent persons from facilitating tax evasion. These guidelines must be implemented through legal regulation. The following discussion summarizes the main principles contained in the guidelines. These guidelines are derived from the 6 guiding principles that underpin the Guidelines of the Corruption Act on which the Law was based.

It is therefore non-prescriptive and has a very high level and contains few details specific to individual industrial sectors (including high-risk sectors called “financial services, tax advice and legal sectors”). The guidelines now contain useful illustrative case studies on what reasonable prevention procedures can be. It should be noted that OCCs have an extraterritorial scope. The offence of tax evasion in the UK applies to any business, regardless of where it is founded or operated. With regard to tax evasion outside the United Kingdom, a company will commit a criminal offence if the facilitation concerns a Uk company or partnership, a company or company having its registered office in the United Kingdom, including a branch, or if part of the facilitation takes place in the United Kingdom. While some companies hope to be able to turn away from compliance issues to survive the current COVID-19 pandemic, HMRC continues to investigate CCOs and actually appears to be increasing the number of investigations. Businesses would be well advised to ensure that the procedures they have in place to address the risk of tax evasion facilitation are adequate, maintained and regularly reviewed. As the figures released by HMRC show, this is not something that is disappearing. Together, the Spring Budget (March 2020), the 2019-21 Finance Bill (March 2020) and the new all-party parliamentary group on anti-corruption and responsible taxation (launched in June 2020) indicated that the focus is increasingly on preventing tax evasion and avoidance.

The Criminal Finance Act 2017 introduced two new offences that target all businesses, but also include partnerships and charities. The CCO rules apply where such a company does not prevent its “affiliates” (basically any person acting for or on behalf of the company) from facilitating tax evasion in the UK or abroad. The legislation introduced two new offences: one related to tax evasion in the UK and the other related to tax evasion abroad. The new crimes aim to fill a perceived gap in the law that the government believes it is too difficult to prosecute a company if its employees facilitate tax evasion by its customers or suppliers. To do this, it focuses on the inability to prevent crimes of those acting for or on behalf of a company, rather than trying to attribute criminal acts to that company. The new offence contains three elements, which are summarized in the government`s updated guidelines (October 2016): First step: Criminal tax evasion by a taxpayer (natural or legal person); Step Two: criminal assistance and encouragement of this offence by a person acting on behalf of the company, whether by taking measures to achieve the following objectives; to be knowingly concerned in; or aid, induce, advise or obtain tax evasion from the taxpayer; Step Three: The company failed to prevent a person associated with it from committing the crime during the second phase. In our view, this is not an additional element of the offence, as it will inevitably be fulfilled once the second stage of the offence has been committed; Defence: This is a defence that, at the time of the commission of the offence of aiding and abetting, the competent authority has put in place “adequate preventive procedures” to prevent its associated persons from committing tax evasion offences (in a second step) (or it is unreasonable to expect that such proceedings have been initiated). .

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