Facilitating Tax Evasion

March 12, 2019

HMRC is reported to be investigating alleged violations of a new criminal offence for the first time as part of the crackdown on money laundering.

A freedom of information request made by the law firm Greenberg Taurig revealed there are five current criminal investigations.

The Criminal Finances Act 2017 introduced the new offence of failing to prevent the facilitation of UK tax evasion. The aim of this was for relevant bodies to be held criminally liable where they fail to prevent those who work for them , from criminally facilitating tax evasion.

What is the actual offence?

The offence is committed where a relevant body fails to prevent an associated person criminally facilitating the evasion of a tax.

Previously in order to attribute criminal liability to a relevant body, you would have to show that senior members of that body were aware and involved, which was much harder to prove.

Tax evasion is defined as an offence amounting to a cheat of the public revenue or any offence consisting of being knowingly concerned in or taking steps with a view to the fraudulent evasion of tax. The offence is only committed where a UK tax evasion offence has been committed if a tax-payer is non-compliant or engaged in a form of avoidance which falls short of evasion the offence is not committed.

The facilitation of tax evasion requires a person to be knowingly concerned in or to take steps to aid or abet another person’s offence of tax evasion. It is not a criminal offence if an associated person inadvertently or negligently facilitates another’s tax evasion. The facilitation has to be criminal.

The person associated has to be in association with the relevant body, so if the crime is committed in an employee’s private life they will not be committing this specific offence.   

It is a defence for the relevant body to have in place reasonable prevention procedures, designed to prevent persons associated with it from committing facilitation offences. This could include regular staff training, contractual terms, compliance monitoring and clear reporting procedures. It is also a defence if it is not reasonable to expect the relevant body to have such procedures.

What is the penalty?

The offence is punishable by way of an unlimited fine and can be dealt with in the Magistrates Court or the Crown Court. There will of course be significant reputational damage to the company and those in charge.

In their 2018 business plan, HMRC set out their target of 100 investigations per year.

The fact that there are only five currently outstanding may be a surprise in the context of their stated intention or may mean that more investigations are imminent.

How Tuckers Solicitors can help you…

To discuss anything to do with facilitating tax evasion please contact us on 020 7388 8333 or email info@tuckerssolicitors.com and we will gladly assist.  

Our offices are open 24 hours a day, 7 days a week, ready to deliver immediate and expert legal advice and representation.