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HMRC recently published a FOI Release updating information on live Corporate
Criminal Offence (CCO) investigations. As with previous updates, HMRC has not
published specifics on the investigations themselves due to taxpayer
confidentiality. HMRC have taken the opportunity to emphasise some important
policy points that clients should keep in mind, including the prioritisation of risks
and sectors that will have a significant impact on changing behaviours.
Since December 2019, one new investigation has been opened taking the total of
live investigations to 10. HMRC have also reported there are a further 22 live
opportunities that are being monitored and reviewed. The majority of these relate
to businesses in the financial sector however they also span 10 different business
sectors and range from small business to some of the country’s largest

The update and ongoing investigations highlight HMRC responsiveness to the
legislation introduced in 2017 and its determination to open discussions with
taxpayers in relation to CCO. All of HMRC’s fraud investigators have received
CCO training as part of their roles. Training has further been provided to over 1800
large business compliance officers in order to raise CCO with their customers and
flag where CCO may be an issue. Customer Compliance Managers (CCMs) have
been trained to be able to probe on how organisations have approached CCO and
underlying governance given the ability to move to a high risk rating for tax
governance in the Business Risk Review (BRR) process if CCO has not been
considered or addressed.

The penalties for not taking reasonable steps in relation to preventing CCOs
carries the threat of unlimited fines for organisations. Given this we are
encouraging our clients to review their risk assessments and be proactive in
considering the current impact of COVID19 measures, particularly the Coronavirus
Job Retention Scheme (CJRS).

CJRS has seen HMRC aggressively pursue taxpayers that have taken advantage
of the scheme for improper use. If an organisation is found to have made a
fraudulent overclaim, it is likely that a CCO review will be commenced and
therefore subject to CCO sanctions (unlimited fines and public naming and
shaming). We know HMRC are investigating circa 3000 overclaims and they
consider there is up to £3.5bn of overclaims in play. As part of assessing
taxpayers HMRC are taking measures such as comparing RTI forms for eligibility,
comparing trading results pre and post furlough of workforce and whistleblowing.
As the scheme falls under Senior Accounting Officer (SAO) obligations for
businesses that meet the threshold and CCO obligations for all businesses, it is
important that clients take steps to ensure that claims made have been done under
an appropriate tax control framework. This then has a knock on effect to any BRR
that may be conducted.

HMRC has reiterated that whilst companies can rely on existing controls under
other financial crime measures, they are of the view that a detailed exercise is
needed to ensure that the tax risks are covered off and they cannot simply rely on
existing controls. Groups will need to evidence monitoring and testing that utilising
payments, such as those under the CJRS, has been done appropriately and
calculated correctly over the course of receipt, per normal SAO guidelines, to help
avoid a “careless” penalty. Evidence needs to be retained in line with the criteria
for this regime that can be shared with HMRC upon request to support their claim.
Companies should satisfy themselves that their claims are accurate and, where
mistakes have been made, either rectify the error or notify HMRC within 30 days.
HMRC will have the powers to charge a “careless” penalty of up to 30% if errors
are identified as part of an audit.