HMRC announces more investigations into the “failure to prevent” tax evasion offence
14 February 2020HMRC has released an update on its investigations of the relatively new corporate criminal offence (CCO) of failure to prevent the facilitation of tax evasion. In its recent announcement, HMRC confirms it now has nine live CCO investigations underway, with 21 other opportunities under review, across a wide range of business sectors.
We first commented on this subject in March 2019, when a response to a freedom of information request confirmed that, at that time, HMRC had only just launched its first investigations into the offence. We noted in that update that HMRC had published its aspiration to be bringing 100 prosecutions a year for serious and complex tax crime by 2022. On its current trajectory, it appears this could still be possible but is perhaps unlikely.
HMRC appears keen to emphasise that these updated figures are evidence it is actively enforcing the legislation across a broad segment of the business community and it is making good use of the power. However, it could still be considered that having only nine live investigations – it is not clear how many of these may be full prosecutions in due course – is still a relatively slow uptake, considering that the new offence came into effect on 30 September 2017.
Interestingly, HMRC also explained in this update that it intends to provide this information biannually with a similar freedom of information style release. It will therefore be possible to track the progress of investigations in the coming years. Notwithstanding the relatively small number of investigations underway now, it seems clear that HMRC remain determined to continue to investigate and potentially prosecute this offence. Companies are therefore well advised to ensure they have the necessary reasonable prevention procedures in place in order to combat the facilitation of illegal tax evasion and protect themselves against potential criminal liability.
With potentially unlimited fines for organisations found guilty of the offences, organisations must take their responsibilities seriously and put in place reasonable procedures to stop the facilitation of tax evasion. This is not about simply increasing the number of corporate prosecutions but changing industry practice and attitudes towards risk, encouraging organisations to do more to prevent tax crime happening in the first place.