HMRC has today commenced a consultation on draft legislation and guidance for the corporate offence of failure to prevent the criminal facilitation of tax evasion.
The consultation considers draft legislation and guidance for the new corporate criminal offence of failure to prevent the criminal facilitation of tax evasion, as outlined in HMRC’s response document of 9 December 2015.
The new corporate offence aims to overcome the difficulties in attributing criminal liability to corporations for the criminal acts of those who act on their behalf. Whilst this consultation refers to the application of the new offence to “corporations”, the draft legislation refers to a “relevant body” to encompass the broad range of legal persons to which the new offence will apply.
The offence as outlined in the consultation response document will have three stages:
Stage one: criminal tax evasion by a taxpayer (either a legal or natural person) under the existing criminal law (for example an offence of cheating the public revenue, or fraudulently evading the liability to pay VAT);
Stage two: criminal facilitation of this offence by a person acting on behalf of the corporation, whether by taking steps with a view to: being knowingly concerned in; or aiding, abetting, counselling, or procuring the tax evasion by the taxpayer;
Stage three: the corporation’s failure to take reasonable steps to prevent those who acted on its behalf from committing the criminal act outlined at stage two.