HMRC launches first Criminal Investigations under the new ‘Failure to Prevent’ Offence
A recent freedom of information request has revealed that HMRC is currently investigating several cases under the corporate criminal offence of failure to prevent the facilitation of UK tax evasion.
This corporate criminal offence, which was introduced in the Criminal Finances Act (CFA) 2017, places a positive obligation on companies to implement procedures to prevent the facilitation of UK tax evasion. While this offence applies to all companies, it is particularly aimed at banks, accountants and law firms, who are often regarded as unwitting ‘enablers’ of this type of crime.
Under section 45(1) of the CFA a company ‘is guilty of an offence if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with (the company)’. A company can defend itself if it can show the tax evasion facilitation offence was committed despite the company having had in place such prevention procedures as it was reasonable in all the circumstances to expect the company to have in place; or it was not reasonable in all the circumstances to expect the company to have any prevention procedures in place. The ‘failure to prevent’ offence can be punished by unlimited fines and orders for confiscation of assets.
The criminal investigations reported by HMRC show that some action is now being taken regarding prosecuting companies for financial crime, something the UK has been comparatively ineffective at in the past and is under increasing pressure to step up, as shown in the recent report by the Treasury Committee on anti-money laundering and anti-financial crime regime in the UK. The launching of these investigations by HMRC potentially marks a first step in the direction of pursuing effective prosecutions in this area and shaping the landscape of corporate liability in the UK in general.
It is not known how long these cases will take to investigate and it is likely that it will be many more months until we see the first prosecution in the UK for this offence. However, it is likely that the number of investigations brought under this legislation will increase over the next few years and companies should be prepared.
The Price of Property
Helen McGhee looks at the present state of UK tax rules that must be considered when owning and disposing of UK property.
Inheritance tax problems in Finance Bill 2020
The rules on excluded property trusts are due to change with effect from royal assent. These changes are complex, and the new rules can have an unexpected and retroactive effect. Emma Chamberlain explores these rules to determine whether it may be necessary to exclude the settlor going forward as a beneficiary.
Trust Registration Service- 5MLD update
HMRC’s Trusts and Registration Service (TRS) was born back in 2017 as part of the implementation of 4MLD. 5MLD has mandated notable amendments to the operation of the TRS that clients and practitioners should not overlook. We have created a Q&A to help to navigate the new upcoming compliance obligations.
DAC6 – delayed but be alert!
Helen McGhee discusses the announcement by the European Commission, proposing to delay disclosure deadlines imposed by DAC6 by three months.