The Corporate Criminal Offences for failing to prevent the facilitation of tax evasion (“CCO”) legislation have been in force since 30 September 2017. As a consequence of these measures, responsible organisations will need to be able to demonstrate that they have proportionate and reasonable procedures in place in accordance with HMRC’s six guiding principles where their business activities could bring them into contact with those who could be evading tax or facilitating the evasion of tax. Examples of what this looks like in practice include:
HMRC’s approach to tax governance has evolved in recent years with the introduction of the Senior Accounting Officer (“SAO”) regime; Tax strategy publication; Country by Country reporting as well as the introduction of the Corporate Criminal Offences for failing to prevent the facilitation of tax evasion (“CCO”), which took effect on 30 September 2017 via the Criminal Finances Act 2017 (“CFA”). Additionally, following consultation that concluded in 2018, HMRC is now running a pilot of their enhanced Business Risk Review (“BRR”) process for large businesses with a greater focus on tax governance and risk management. BRR will enable HMRC to target resources more effectively towards those it deems to be higher risk.
This article focuses on examples of what organisations have been doing to demonstrate implementation of reasonable prevention procedures, includes analysis from tax experts regarding the ongoing review of the UK tax compliance framework and discusses HMRC’s CCO ‘self-reporting’ mechanism.
The Criminal Finances Act 2017