Corporate Criminal Offences
The Corporate Criminal Offence (‘CCO’) was introduced by the Criminal Finances Act 2017 (‘the Act’) which imposes on companies, limited liability partnerships and partnerships the obligation to implement procedures with the view to preventing the criminal facilitation by associated persons, such as employees, directors and those providing a service, of tax evasion by a third party.
At the start of 2023, HMRC confirmed there are nine ongoing CCO investigations.
Amandeep Murria of Kangs Solicitors briefly outlines the offence and the nature of a potentially available defence.
Our team is led by Hamraj Kang who is recognised as a leading expert in the field of criminal fraud investigations. He is one of only two solicitors nationally to be ranked annually as a ‘star individual’ in the legal directory Chambers UK.
Other members of the Team are also ranked in Chambers UK as well as The Legal 500.
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Corporate Criminal Offences | Kangs HMRC Investigations Solicitors
The Background
In view of Governmental concern at the substantially increasing level of criminal tax evasion, it introduced the Act to impose upon corporations stringent procedures designed to prevent ‘associated persons’ from criminally facilitating tax evasion.
Who are the Associated Persons?
This definition includes, inter alia:
- Directors
- Agents
- Employees
- Contractors
- Suppliers
- Intermediaries.
Which Parties Are Potentially Liable?
- The Act applies to all relevant bodies irrespective of size and there are no de minimis thresholds.
- Partnerships and companies.
- If UK tax evasion is identified, the business can be located anywhere.
- Businesses with a UK connection will be caught in respect of the facilitation of non-UK tax evasion.
What are the Pre-requisites for a CCO?
The investigation authority must be able to demonstrate that:
- a person or a commercial entity, who is associated with the business, must have criminally facilitated the tax evasion, whilst performing services for that business and
- criminal tax evasion has taken place, not simply tax avoidance .
What are the Penalties and Impact of a CCO?
The stigma attaching to any business found guilty of a criminal offence can, potentially, be totally overwhelming per se and which may well be accompanied by:
- such unlimited financial penalty as is imposed,
- damage to reputation,
- disqualification proceedings against directors and other officials.
Potential Defence | Kangs Tax Evasion Defence Solicitors
A defence may be available if it can be demonstrated that stringent procedures have been put into place, and are enforced, to prevent the illegal evasion of tax.
Guidance has been provided by HMRC highlighting six guiding features, the effective presence and updating of which will evidence compliance:
- monitoring and review,
- due diligence,
- risk assessment,
- proportionality of risk-based prevention procedures,
- communication, including training, and
- top level commitment.
It is important a business:
- undertakes regular risk assessments to ensure procedures are strictly adhered to
- conducts risk assessments which should be documented to ensure an audit trail is available
- provides regular and updated training to minimise risk.
All of the above can also inform a business with regard to future policy decision making. Such a regime will assist in improving the procedures implemented by the business, thereby reducing the risks to a CCO.
How Can We Assist? | Kangs HMRC Investigation Defence Solicitors
If either you or your business are made subject to any form of HMRC investigation, including one potentially involving a CCO, please contact us immediately.
If the HMRC investigation is in respect of a CCO, there will be the opportunity to respond to such allegations, which by their very nature will be both complicated and detailed requiring experienced professional assistance.
Our experienced Team will be happy to assist and provide detailed guidance in relation to all forms of HMRC Civil Investigations as well as HMRC Criminal Investigations.
If we can be of assistance, our Team is available via telephone 0333 370 4333 and by email info@kangssolicitors.co.uk.
We provide initial no obligation discussion at our three offices in London, Birmingham and Manchester.
Alternatively, discussions can be held virtually through live conferencing or telephone.
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