A symptom of these changes may be the significant leaks of data held by law firms, corporate registries, banks and financial service providers into the public domain, such as the Panama and Paradise Papers.
HMRC’s criminal investigation policy makes it clear it will use internet data, which is available to anyone, including blogs and social networking sites.
Leaked information is not expressly referenced, though HMRC is not adverse to making use of information that has been leaked – or stolen, depending on your point of view – and it has been reported that HMRC expected to collect £100m of extra tax from information revealed within the Panama Papers.
New powers to pursue corporate bodies
In September 2017, HMRC received a boost to its criminal powers following the introduction of the failure to prevent the facilitation of tax evasion offences under the Criminal Finances Act 2017.
These two new offences apply to corporates (companies and partnerships) and cover the failure to prevent facilitation of tax evasion of either UK taxes or non-UK taxes by employees, agents or any other person performing services for or on behalf of the corporate (in each case acting in that capacity).
While the offences apply to all corporates, the associated guidance underlines that the offences will be a key risk for law firms, accountants and banks.
The offences do not change the activity that amounts to a crime, but rather focus on holding corporates to account.
The offences themselves are modelled on the strict liability corporate offence of failure to prevent bribery, contained within the UK’s Bribery Act 2010. That offence had originally been introduced because UK law regarding corporate criminal liability made it difficult for large corporates to be held to account; in order to establish corporate liability, a prosecutor generally needs to prove that the directing mind (that is, senior officers) of the corporate was complicit in the relevant criminality.
This has caused frustration for prosecutors. As a previous director of the Serious Fraud Office memorably put it: “The email trail has a strange habit of drying up at middle management level.”
Similar to the Bribery Act, there is a compliance defence available to such offences if the corporate had in place “reasonable” procedures designed to prevent the facilitation of tax evasion.
This defence provides a powerful incentive for corporates to put in place a compliance programme to combat tax evasion, and some commentators believe thevalue in the new offences isin incentivising the implementation of such a programme.
Others take the view that to incentivise compliance, it is necessary for there to be sufficient enforcement action that corporates take the offences seriously.
Enforcement trends
