Corporate Facilitation Offence legislation laid before Parliament

Corporate Facilitation Offence legislation laid..

Draft legislation on the Corporate Offence of failure to prevent the facilitation of tax evasion was laid before Parliament on 13 October.

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HMRC has laid the draft legislation on the Corporate Facilitation Offences before Parliament as part of the Criminal Finances Bill. These comprise the failure to prevent the facilitation of UK tax evasion and the failure to prevent the facilitation of foreign tax evasion offences. This follows a period of consultation on the proposed legislation between April and July 2016. The updated drafts of the legislation and guidance reflect minor updates on the previous drafts issued in April 2016. HMRC’s guidance will remain in draft and will not be finalised until the Bill has received Royal Assent. HMRC are keen to receive input from stakeholders to assist in developing the guidance, particularly where stakeholders have relevant case studies or examples. The Bill, as expected, provides for commencement on 1 September 2017.

To be operative the offence requires two prior criminal acts:

  • By a taxpayer (either a legal or natural person) under existing criminal law (e.g. cheat or fraudulently evading the liability to pay VAT); and
  • By a person associated with the relevant body (corporation or partnership), knowingly concerned in; or aiding, abetting, counselling, or procuring the tax evasion by the taxpayer.

In these circumstances a failure to take steps which are considered to be ‘reasonable in all the circumstances’ to prevent those who acted on its behalf from committing the criminal act would render the business liable under either of the offences.

The updated draft of the guidance incorporates additional commentary and examples drawn from responses to the consultation document, including on the concept of dual criminality relevant to the overseas offence, and the application of the offence to branches.

Illustrative examples and suggestions are also now included in the guidance within the Principles of:

  • Risk assessment;
  • Proportionality of risk-based prevention procedures;
  • Top-level commitment;
  • Due diligence;
  •  Communication (including training); and
  • Monitoring and review.

The principles have been reordered since the first draft of the guidance, with risk assessment now stated as the first principle. This is a sensible change given that an effective risk assessment will be key in determining the appropriate response to this legislation.

A summary of the responses received and HMRC’s updated draft guidance has also been released.

The Bill is due to receive its second reading on Tuesday 25 October.

 

For further information please contact :

Chris Davidson

Peter Kiernan

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