Corporate Criminal Offence investigations in 2020

October 18th, 2020

corporate criminal offence

Corporate Criminal Offence investigations continue despite pandemic

HM Revenue & Customs (HMRC) has 10 live corporate criminal offence (CCO) investigations according to new statistics.  The UK government department also has a further 22 live opportunities currently under review.  It has opened one new investigation since December 2019.

Wide ranging investigations

The investigations span 10 different business sectors, including financial services, oil, construction, labour provision and software development. Specifically, 12 investigations or opportunities relate to businesses in the financial sector, according to the press release published following a freedom of information request.

HMRC has, of course, been very busy during 2020 administering the governments raft of coronavirus support measures, in particular the furlough scheme.  However, the fact that a global pandemic has not interrupted their pursuit of CCO investigations is a strong indicator of their priorities.  Indeed, though only one new investigation has been opened this year, the fact that any have been initiated in the midst of the Covid-19 disruption is a statement of intent.

About Corporate Criminal Offence

The CCOs were introduced in 2017 and make it a criminal offence if a business fails to prevent its employees or agents from facilitating tax evasion.  If you are a business and connected to the UK in some form, you may find yourself culpable under the Criminal Finances Act if you have not implemented the appropriate steps.

The CCO has potentially unlimited fines for organisations found guilty of the offences. Companies must take their responsibilities seriously and put in place reasonable procedures to stop the facilitation of tax evasion.  In order to do this, HMRC have published six guiding principles which underpin a defence:

  • Creation, maintenance, application and management of a Risk Assessment Register
  • Apply a measured approach to your policies and procedures commensurate with the level of risk attached to your business
  • Board-level buy-in visibly leading the way in terms of the corporate culture congruent with CCO
  • Creation, implementation and ongoing management of appropriate levels of due diligence
  • Build out, implement and manage training for associated parties
  • Effective corporate housekeeping with regular reviews and updates: internally and public facing

Based on what has been revealed by the HMRC press release, the first principle appears particularly significant. The fact that 12 of the 32 current investigations and opportunities relate to businesses in the financial services sector indicates a pattern of enforcement focus.  HMRC have identified the financial services sector as posing a higher risk of tax evasion.

Controlling risk

This risk, increased by the greater opportunities to enable tax fraud which arise in the financial sector, need to be controlled.  Even firms whose controls were reasonably fit-for-purpose at the beginning of 2020 may need to re-evaluate and re-assess due to the ways in which the world has changed.  Pre-covid controls may no longer be sufficient for a geographically displaced work environment.

In February this year HMRC declared that ‘this is not just about corporate prosecutions, but about changing industry practice and attitudes towards risk, encouraging organisations to do more to prevent tax crime happening in the first place’.  At Briars we are offering businesses a full support package to ensure that the required changes are made and that all necessary measures are put in place.

Future protection

Briars CCO experts will remain afterwards to handle any questions that may arise and to train your inhouse teams so that you will ultimately be able to manage these requirements for yourself.  Once this transition is complete we will continue to keep your upskilled team updated on any changes in legislation.

HMRC has made rapid strides in their investigation of CCOs and have demonstrated their intent to make use their new powers.  Failing to put appropriate prevention measures in place will leave organisations without a defence.  Briars are here to ensure your business is demonstrably responsible, compliant, and protected.

If you require any guidance about Corporate Criminal Offence and implementing the set policies and procedures to create a defence, please do not hesitate to contact Briars.

Kate Jolly

Kate co-founded Briars in 1991 with Andrew Brierley. She specialised in tax law and today continues to advise clients on international operations, particularly land, expand and exit! In her spare time Kate is a Past Master of the City of London Guild of Entrepreneurs and a Director of CCARHT (Cambridge Centre for Applied Research into Human Trafficking).