Criminalising corporate entities (including partnerships and LLPs) that do not do enough to prevent the facilitation of that evasion by the entity’s employees, contractors and agents. There is real potential for firms to incur criminal liability unless action is taken now to ensure that the risks are identified and addressed accordingly.
The recent conviction of Skansen and jailing of two individuals has highlighted the need for firms to take action now to ensure that prevention procedures are in place to provide protection against criminal investigation. Although the case concerned the Bribery Act, the facilitation offence is modelled on that Act and the conviction demonstrates that the government is serious about tackling these issues.
The Judge highlighted the need for corporate policies to prevent bribery. This puts the spotlight on preventing a dishonest act from happening, and punishing firms that do not do enough towards this prevention as well as the dishonest act itself.
The facilitation offences operate in exactly the same way, so an accusation of failing to prevent the facilitation of tax evasion could find its way to the courts soon. It remains to be seen whether the director receiving the bribe in the Skansen case declared it on his tax return; if not, a facilitation case as well as a tax evasion case could follow.
Firms must be able to show they have reasonable procedures in place to prevent facilitation of tax evasion. A key element of this is an initial assessment of the risk that the tax evasion and its facilitation could happen, together with what mitigating measures to help prevent it are already in place and what further action or changes may be needed. This plays a fundamental role in demonstrating to HMRC that a firm has actively sought to put reasonable prevention procedures in place. Firms cannot afford to delay completing such a risk assessment followed by implementation of any new measures identified as needed.
Our experts in tax and counter fraud forensic analysis can help to ensure that your firm is protected. We have developed a methodology to help firms to assess their risk, areas of vulnerability and the strength of existing controls followed by recommendations to address any deficiencies. The methodology has academic approval from the University of Portsmouth Centre for Counter Fraud Studies, where Jim Gee, Head of Forensic and Counter Fraud Services at Crowe is visiting professor and Chair.
For more information on the new offence and the specialist advice we can offer please contact John Cassidy on +44 (0)20 7842 7365.