Source: HMRC Press Release 30 September 2017
From 30 September 2017, the Criminal Finances Act 2017 introduces two new criminal offences – one applying to the evasion of UK taxes and one applying to the evasion of foreign taxes.
The offences hold corporations and partnerships criminally liable when they fail to prevent their employees, agents, or others who provide services on their behalf, from criminally facilitating tax evasion. This is a significant change from existing law under which they can only be found liable for criminally facilitating tax evasion if the most senior members of the organisation – typically the board of directors – are aware of the facilitation.
Source: accountancyage.com, 27 September 2017
“KPMG’s South African branch has come under fire and suffered a severe reputational hit after becoming caught up in a growing corruption scandal surrounding one of the country’s most powerful families, the Guptas.”
“KPMG is accused of facilitating the family in tax evasion and corruption. The firm denies any wrongdoing but admits to missing several “red flags” in relation to the family’s accounts. At least eight senior KPMG South Africa officials have resigned in the wake of the scandal, including CEO Trevor Hoole.”
“KPMG conceded that audits of Gupta companies: “fell well short of the quality expected, and that the audit teams failed to apply sufficient professional scepticism and to comply fully with auditing standards”.”
“As a result of the scandal KPMG have lost several audit contracts in South Africa, with even more companies considering severing ties. The firm is under investigation by South African regulatory body IRBA and risks being removed from the country’s auditors’ register.”
Originally published by Grant Thornton UK LLP, 9 May 2016
Reinsurance is a common connected-party transaction for groups operating in the insurance sector. This 2016 article from Grant Thornton discusses a key change to the OECD Transfer Pricing Guidelines arising from BEPS and how it impacts the transfer pricing of intra-group reinsurance.
The article concludes that “for many groups there is unlikely to be a sea change in the transfer pricing analysis performed, but there will be a greater level of documentation and evidence required to support the nature of the analysis performed.”
Source: accountancy age.com, 29 September 2017
“It’s possible that some of your clients won’t have the first clue about tax avoidance or its implications. Some of them may have a little knowledge but be working on the assumption that it’s all legal and above board. Educating them on the tax avoidance basics is a priority.”
“Crucial points to share
- HMRC is getting tough – any scheme that claims to help businesses reduce their tax liability is subject to investigation.
- It can be hard to recognise a tax avoidance scheme, but the government advises people to be wary of schemes that sound too good to be true, those that offer seemingly huge benefits with very little cost to you, and anything that offers payment in the form of a loan that you won’t be asked to pay back. Any scheme that requires moving money out of the country should definitely set those alarm bells ringing.
- Clients may come across promoters who claim that having a Scheme Reference Number (SRN) shows that they are HMRC approved. They aren’t, and a world of trouble is likely waiting for anyone who engages with such a scheme.
- Inform clients that responsibility lies with them. HMRC has made it clear that ignorance or misunderstanding are not going to be accepted as get-out-of-jail-free cards – whether you entered into a tax avoidance scheme by accident or with full knowledge, you’ll have to pay the price.”