Nine companies face HMRC investigations over tax evasion

HMRC is ramping up the use of its corporate criminal offences (CCO) powers, with nine businesses curently under investigation for failing to stop the facilitation of tax evasion

It has also lined up a further 21 possible investigations across 10 different business sectors, including financial services, oil, construction, labour provision and software development.

This is the first time the tax authority has released the figures, following a number of FoI requests. In future, the number of live cases will be published twice a year by HMRC.

These investigations and potential probes sit across all HMRC customer groups from small business through to some of the UK’s largest organisations.

As yet, there has not been a conviction under the CCO legislation. However, the number and spread of ongoing investigations clearly demonstrate that HMRC is actively enforcing the legislation across all tax and duty regimes and across organisations of all shapes and sizes.

By tackling the most serious forms of tax crime HMRC said it was ‘creating a level playing for honest businesses and citizens. We are determined that they shouldn’t be disadvantaged or impacted by the criminal actions of others’.

HMRC has a range of civil and criminal powers at its disposal to tackle those committing serious fraud. It can lead to prosecution and imprisonment, life-changing penalties, seizure of assets, and sanctions. It also takes all necessary action to recover the unpaid tax.

In 2019, HMRC’s Fraud Investigation Service launched over 16,000 civil and more than 760 criminal investigations, securing and protecting more than £5.4bn for vital public services.

The CCO legislation was introduced in Part 3 of the Criminal Finances Act 2017 and is not retrospective in nature. It includes two offences: failure to prevent facilitation of UK tax evasion offences (s45) and failure to prevent facilitation of foreign tax evasion offences (s46).

HMRC only has jurisdiction over s45 offences, with s46 (the overseas offence) within the remit of the National Crime Agency (NCA) and/or Serious Fraud Office (SFO).

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.

HMRC said ‘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’.

Investigations under the CCO legislation should act as a wake-up call to all businesses.

Andrew Sackey, partner at Pinsent Masons and former head of HMRC’s Offshore Corporate and Wealthy compliance division, said: ‘HMRC has been quick out of the blocks, making extremely rapid progress in using these powers.

‘HMRC is very effective in being able to spot breaches under these laws. Investigation teams are increasingly conducting tax evasion investigations as normal (using either civil or criminal powers) and then exploring whether there has been a facilitation by someone associated with a corporate and, if so, testing if the corporate has the right controls in place. This makes it simpler to identify, investigate and subsequently prosecute non-compliant businesses.

‘HMRC’s approach to identifying cases also goes some way to explain why action on the CCO front has been so much more rapid than in respect of Bribery Act 2010 matters.’

Reasonable prevention measures for the CCO follow the principles of the Bribery Act 2010, which means putting in place bespoke prevention measures. Failure to do this could leave corporates without a defence.

HMRC said it was ‘pro-actively engaged in tackling illicit finances as part of our broader compliance activity on serious and organised revenue crime. We are clamping down on serious and complex tax fraud and seeking to make use of powers under the Criminal Finances Act’.

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