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WEBINAR
New Corporate Criminal Offence: Failure to prevent facilitation of tax evasion
Piermario Porcheddu | London
Nigel Dolman | London
Jennifer Revis | London
Giuliana Polacco | Milan
8 November 2017
© 2017 Baker McKenzie
Speakers
2
Piermario PorchedduSenior AssociateLondon+44 20 7919 [email protected]
Nigel DolmanDirector, TaxLondon+44 20 7919 [email protected]
Giuliana PolaccoCounselMilan+39 02 7623 [email protected]
Jennifer RevisPartnerLondon+44 20 7919 [email protected]
1 Evolution of Tax Criminal Offences
© 2017 Baker McKenzie
Enforcement Trends
4
Countries increasingly
turning to criminal
investigation and
enforcement as part of
overall tax administration
Tax raids a common
feature in tax/criminal
investigations in many
jurisdictions
Countries increasingly
using criminal
enforcement as a means
of achieving more
favorable settlement in
civil audits
© 2017 Baker McKenzie
High Risk Issues
5
Substantive areas of criminal enforcement vary by
country, but high enforcement issues include:
Fraudulent behaviours
Tax abusive transactions
VAT
Permanent Establishment
Effective Place of Management
© 2017 Baker McKenzie
Targets of Criminal Tax Investigations
6
Who/Which are
the subjects
involved in case
of criminal tax
offence
Who are the individuals
who could be involved
(directors, officers,
consultants)
Subjective element
Aiding and abetting
principle
Companies –
Individuals
2 Failure to Prevent Facilitation of Tax Evasion
© 2017 Baker McKenzie
Key Elements of the Offence
8
Associated Person…which was criminally facilitated by natural or
legal person associated with a corporation…
Criminal tax evasion by a taxpayer under existing
UK (and overseas if non-UK tax loss) law…
Taxpayer
Corporation…and that corporation failed to take reasonable
steps to prevent such facilitation
© 2017 Baker McKenzie
Territorial Scope of the Offence
9
The easiest starting point is to consider what tax has been allegedly evaded:
so long as the evasion relates to UK tax, it does not matter whether the corporation that failed to prevent facilitation is not a UK entity, and whether the facilitation or evasion occurred through conduct entirely outside of the UK territory
conduct that contravenes the law of another country may give rise to a foreign tax evasion offence where:a) under UK law the actions of taxpayer (tax evasion) and associated person (facilitation)
would be an offence; andb) overseas jurisdiction has equivalent offences at both the taxpayer and facilitator level
offence applies if either:a) the company is established or carries on any part of its business in the UK – even if the
facilitation occurs in respect of a business outside of the UK; orb) any part of the criminal facilitation took place in the UK
UK Tax:
Foreign Tax:
Dual Criminality Test:
© 2017 Baker McKenzie
What is an 'Associated Person'?
10
A person is 'associated' with a 'relevant body' if that person is an employee, agent or other person who performs services for or on behalf of the relevant body
The 'associated person' can be an individual or an incorporated body
HMRC's guidance states that whether a person is an 'associated person' is a question of fact
The contractual status or label does not matter
The concept of performing services for or on behalf of an organisation is intended to be broad in scope
© 2017 Baker McKenzie
The 6 Guiding Principles(HMRC Guidance dated 1 September 2017)
'Reasonable Procedures' Defence
11
Top level commitment
Proportionality Due diligence
Communication (including training)
Risk assessment
Monitoring and review
NB. Overlap with Anti-Corruption, AML, KYC, FCA reporting obligations…
© 2017 Baker McKenzie
How to Conduct the Risk Assessment
12
Questionnaire
Existing compliance
policiesInterviews
0102
Workshop
0304
© 2017 Baker McKenzie
What Types of Risks are we Identifying in the Risk Assessments?
13
Associated Persons
VAT
Employees
Employment taxes
Payment processes/ AML
Customs/ Excise
Corporation Tax Returns & Accounts
M & A
© 2017 Baker McKenzie
Recommendations (Based on Risks Identified)
14
Amending existing policies/ adopting
new policies
Contractual protection
Training and communication
Additional due diligence checks
Changes in payment processes/ AML controls
On-going monitoring/ auditing of
risks
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© 2017 Baker McKenzie
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