HM Revenue and Customs (HMRC) has confirmed that it has opened its first investigations into the corporate criminal offence of failure to prevent the facilitation of UK tax evasion.
According to a Freedom of Information request, HMRC has less than five investigations ongoing into the failure to prevent UK tax evasion, an offence that was introduced in the Criminal Finances Act 2017 (CFA). The offence forms part of an effort to tackle money laundering and is intended to hold companies and partnerships liable for tax evasion.
The only defence available to any organisation accused of the offence is that it had reasonable prevention procedures in place to prevent their associated persons from facilitating tax evasion. As yet, there is little to indicate what prevention procedures would be considered good enough to constitute such a defence.
HMRC has sole responsibility for investigation of the UK offence. But the National Crime Agency (NCA) and Serious Fraud Office (SFO) cover the CFA offence of failing to prevent the facilitation of foreign tax evasion.
Although the HMRC has investigations ongoing, the first prosecution for failure to prevent UK tax evasion is yet to be seen. For now at least, it is hard to gauge how often HMRC will use the offence as the basis of an investigation. At present, HMRC will not give an exact figure for the number of ongoing investigations; arguing that "the release of some of this information would risk identification of the individuals concerned.''
It is also difficult to say, with any degree of certainty, whether HMRC will be open to the idea of reaching a civil resolution to such an investigation. But while a number of questions still surround the use of the offence, it is certainly a useful tool for HMRC.
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