The SFO Handbook on Corporate Cooperation Guidance
Last week, the Serious Fraud Office (SFO) published a handbook on what it expects from organisations seeking cooperation credit in an investigation. This is the first time the SFO has formally set out written guidance to clarify how they will assess cooperation and, as such, is a key reference source for any company navigating its way through an investigation or seeking to negotiate a settlement with the SFO.
Cooperation is defined as “providing assistance to the SFO that goes above and beyond what the law requires”. Examples of this include:
· identifying suspected wrongdoing and criminal conduct together with the people responsible;
· reporting to the SFO within a reasonable time of the suspicions coming to light; and
· preserving available evidence and providing it promptly in an evidentially sound format.
Extensive guidance is given in the handbook on preserving and providing material to the SFO, the SFO’s aim being to ensure corporations collect all relevant evidence, maintain its integrity, and present it a way that facilitates the SFO’s ability to review it. Additionally, the SFO also encourages corporations to alert them to, and even provide them with, ‘material that the organisation cannot reach’ such as private or third-party emails and bank accounts. If corporations have such information and it is relevant, then they should, as a matter of course, seek legal advice on the sharing of personal data and data privacy.
Regarding industry and background information, the handbook suggests that corporations who ‘identify potential defences that are particular to the market or industry at issue’ would be deemed cooperative. However, the SFO’s appeal for the provision of information on ‘other actors in the relevant market’ could violate confidentiality clauses or result in questions as to how and why such data was obtained. Again, legal advice should be sought as a matter of course before providing disclosure on third-parties.
The guidance strongly encourages companies to consult the SFO before any individuals are interviewed or any action taken. Depending on the size and nature of the corporation and the issue at hand, this approach could prove difficult for companies to do while maintaining their business operations. This is only guidance; there is scope to discuss and negotiate with the SFO to ensure that commercial operations can continue as uninterrupted as possible.
Finally, the guidance emphasises that corporations should waive legal privilege on notes and transcripts of witness interviews to be deemed genuinely cooperative, with the handbook stating that if a corporation does not waive privilege, it could impact their eligibility for a Deferred Prosecution Agreement. However, corporations and their counsel will no doubt continue to battle with the SFO over access to such materials on the basis of legal privilege.
Despite all the examples of cooperation provided in the handbook, there is no guarantee that if a company follows them that this conduct will be taken into account in an investigation. Indeed, the handbook provides no examples of any actual benefits that cooperation could bring to a corporation. As such, while the report is useful in making clear what the SFO expects, it is not necessarily incentivising to ensure these expectations are met.
Increased Investment in Personal Tax Compliance in the UK (Published in Thought Leaders 4 Private Client)
Advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. To compound the issue, the Russian invasion of Ukraine and the corresponding economic fallout prompted domestic governments to increase transparency in relation to investments held by wealthy foreign individuals (with a focus on oligarchs).
In the UK, in the context of the cost-of-living crisis, public opinion certainly seems to be in favour of increased accountability for high-net-worth individuals (eg, on 9 October 2022, 63% of Britons surveyed thought that “the rich are not paying enough and their taxes should be increased”).1
HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work; they are well placed to take advantage of new international efforts to increase tax compliance, particularly considering the already extensive network of 130 bilateral tax treaties in the UK (the largest in the world).2 The UK was also a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and personal tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
It should be noted that a somewhat piecemeal approach, with constant tinkering makes compliance difficult for the taxpayer and is often criticised for lacking the certainty that a stable tax system needs to thrive.
This article was first published with ThoughtLeaders4 Private Client Magazine
Tax-Related Measures in the Autumn Statement 2022
On 17 November 2022, the Rt Hon Jeremy Hunt MP, the Chancellor of the Exchequer, unveiled the contents of the Autumn Budget 2022. This comes after the International Monetary Fund (IMF) published its world economic forecast on 11 October 2022. The IMF expects the British economy to grow 3.6% in 2022 and 0.3% in 2023. Other major developed economies are also expected to stagnate next year, namely Spain (1.2%), the US (1.0%), France (0.7%), Italy (-0.2%) and Germany (-0.3%).
This note focuses on tax measures included as part of that statement.
Offshore Structures and Onward Gifts
The so-called “onward gift” tax anti-avoidance rules were introduced by the Finance Act 2018 to complement the changes brought in the previous year aimed at restricting the UK tax privileges afforded to non-UK domiciled individuals. The rules were designed to close some perceived loopholes in relation to the taxation of non-UK resident structures (including but not limited to non-UK trusts). With effect from 6 April 2018, it would no longer be possible for an individual to receive a gift without questioning its providence, particularly where family trusts are involved.
The rules were designed to prevent non-UK structures from using non-chargeable beneficiaries as conduits through which to pass payments in order to avoid tax charges. Gone are the days of “washing out” any trust gains that could be matched to offshore income or gains by prefacing a payment to a UK-resident taxable beneficiary with a non-taxable primary payment to a non-UK resident beneficiary.
“It is notoriously challenging to prove a negative (especially to HMRC) and even more tricky where the taxpayer must speak to someone’s intention other than their own.”
Note that the new rules will apply where funds are received from non-UK resident structures before 6 April 2018 to the extent that they are subsequently gifted after that date.
Increased Investment in Personal Tax Compliance in the UK
Changes in public opinion, advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. In addition, the Russian invasion of Ukraine and the corresponding economic fallout have prompted governments to increase transparency in relation to investments by wealthy foreign individuals in their countries.
The UK’s HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work.
It should therefore be well placed to take advantage of new international efforts to increase tax compliance, particularly against the backdrop of the already extensive network of bilateral tax treaties in the UK, and not forgetting that the UK was a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
Case note: Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC)
As HMRC continue to apply the Kittel principle to increasing numbers of industries and businesses, taxpayers need to be vigilant about evidential requirements that HMRC must fulfil in order to discharge their burden of proof. Read JHA’s latest insight into the First-tier Tribunal’s decision in Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC).
If you require any further information about the Kittel, Mecsek, and Ablessio principles, or any other allegations by HMRC of fraud or fraudulent abuse, please contact Iain MacWhannell (firstname.lastname@example.org).