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The Corporate Criminal Offence - should you be worried?

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The Corporate Criminal Offence (“CCO”) legislation was introduced with effect from 30 September 2017. The aim of the legislation is to ensure that relevant bodies could be found criminally liable where it is proven that they have failed to prevent those who act for, or on their behalf from criminally facilitating tax evasion.

Prior to the enactment of this legislation, it had to be demonstrated that senior members of the relevant body were involved in and aware of the illegal activity, however, the now widely-drafted provisions capture activities undertaken by employees, agents or those performing services for the business.

What this means in practice is that ignorance is not an excuse.

The government’s view was that, by ensuring that the relevant bodies could be criminally liable, it would encourage these various bodies to put in place a series of reasonable rules and procedures that both identify and mitigate tax evasion facilitation risks.

A relevant body for the purposes of the legislation means a body corporate or a partnership, which includes entities of a similar character which are formed under foreign laws. Every organisation that does business with or via the UK needs to be mindful of the legislation and proactively ensuring that procedures are in place.

For those entities that cannot demonstrate that they have a specific process and controls in place to ensure that they do not (consciously or unconsciously) facilitate tax evasion, they face:

  • Unlimited fines,
  • Public record of the conviction, and
  • Significant reputational damage.

It is important to note that there need not be any benefit to the entity from the actions undertaken, and that it can still be found criminally liable. The rules apply to UK and non-UK bodies alike.

WHAT IS A CCO?

For a CCO to have taken place, there must be:

  • Criminal tax evasion by the tax payer,
  • Criminal facilitation by an associated person of the relevant body (that is they must be deliberately and dishonestly taking actions which facilitate the tax evasion by the taxpayer), and
  • The relevant body must have failed to prevent its representative committing the criminal facilitation.

The only defence against CCO is that the business has reasonable prevention methods in place (or that it is unreasonable to expect it to have such methods).

To put it into a little more context, where a professional such as a trustee, accountant, banker or lawyer facilitates tax evasion by a client, that professional also commits a crime.

Examples of what might be considered the facilitation of tax evasion include advisers allowing clients to make claims within their tax returns without any grounds for the claim, being aware that clients are actively seeking ways in which they can hide income or gains (or their assets) and assisting with implementation and maintenance of the same, manipulation or doctoring of documents.

HOW CAN HAMILTON ROSE HELP?

We are familiar with this legislation and we have extensive experience of advising offshore trustees and other entities on their risks and obligations in this respect.

We can ensure that you have a demonstrable process in place to ensure that you can demonstrate reasonable steps taken to ensure you do not unwittingly facilitate evasion.

If we do find that you (or someone acting on your behalf) may have unwittingly facilitated evasion, we can help you "self-report". Whilst self-reporting does not guarantee that the relevant body will not be prosecuted, it may be used in their defence or taken into account when penalties are levied upon a successful conviction.

If you have any concerns, please do get in touch and we would be happy to discuss on a no-obligation basis: info@hamiltonrose.tax.

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