• Corporate Criminal Offences: only a third of businesses have acted to protect themselves

Corporate Criminal Offences: only a third of businesses have acted to protect themselves

05 November 2020

This week, HMRC shared research carried out on over 1000 businesses during late 2018. The questions were all focused on their awareness of the Corporate Criminal Offences (CCO) that were part of the Criminal Finances Act 2017. 

CCO was designed to drive a “behavioural shift among companies and partnerships to take an active and increased responsibility for preventing the facilitation of tax evasion”. The objective of this research was to examine the extent to which this has been successful.

Further insight how the BDO Tax Risk team can support you, are found below:

Corporate Criminal Offences in COVID-19: HMRC guest speaker and insights

Here you hear practical advice and guidance on the Corporate Criminal Offences legislation within the context of COVID-19 and remote working. Our panel of speakers are from BDOs leading Tax Risk Team and we have an exciting guest speaker Samuel Dean, HMRC Lead for CCO.

Watch the webinar now

Research headlines figures

The results from the research clearly demonstrated that a lot more work needs to be done on raising awareness of the legislation:

  • 74% have not even heard of the Criminal Finances Act, and of those who were aware, only around one third thought it was relevant to their business
  • Large businesses and those in the financial services and insurance sector are much more likely to have taken action
  • However, 64%, almost two-thirds of businesses had not yet made any changes to their operations as a result of the Act
  • Over half of all businesses (55%) said they had at least one of the expected five prevention procedures in place
  • Over a quarter (26%) say the intend to make changes in the next 12 months.

We can see, therefore, that whilst some operational changes are happening as a result of the introduction of CCO, it is also clear that the key messages in HMRC’s guidance are not getting through. For example, the research provided evidence that companies are relying on existing procedures and have not carried out risk assessments for CCO. HMRC states quite clearly in its guidance that this will not provide a defence.

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The need for action

With no de minimis to the CCO legislation, knowing that HMRC is already carrying out live investigations and, with sanctions including unlimited fines, criminal prosecution and director disqualification, there is a real risk for organisations if nothing is done. All we have to do is look at the Skansen Bribery Act case (very closely aligned to CCO) to see what the impact of not having appropriate prevention procedures in place can have on a business.

There is some good news for HMRC in that some operational changes are beginning to happen because of CCO. However, the message to HMRC, advisors and business leaders is that a lot more still needs to be done to embed a culture where the facilitation of tax evasion is not acceptable; thereby minimising the risk of a successful prosecution.

For help and advice on any tax risk issue please contact James Egert, Ed Dwan or Martin Callaghan.

CCO Guide

Meet your ‘Communication and Training’ requirements under CCO legislation with our cost-effective training and education module.

CCO eLearning

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How can BDO Tax Risk team support you?

All businesses continue to develop their response both to COVID-19 and also an evolving working environment post COVID-19. The challenges, and opportunities, of a remote workforce and the accelerating pace of digital change mean that different approaches to compliance, governance and regulation must be considered. 

It is important to ensure your reasonable prevention procedures are designed to prevent associated persons from commuting the facilitation offences in the new reality. 

This Toolkit provides your organisation with the tools, templates and knowhow to develop a response to the Corporate Criminal Offence legislation.

It is a step by step guide to ensuring that the controls you implement are aligned to HMRC’s Six Guiding Principles and meet the legislations requirements, including carrying out your own CCO Risk Assessment. The documentation includes various policies, internal and external messaging and example contractual terms.

Ensuring your staff and other associated persons understand their responsibilities is a critical control in minimising the risk of enforcement action. We have developed a bespoke elearning course to meet HMRC’s requirements.

The elearning module can be easily uploaded to your existing Learning Management System for staff distribution, or we can provide a platform through which you can distribute the training. This method of learning and embedding is well suited to remote working.

  • Risk assessments and ongoing monitoring

Where there are staff reductions, employees working from home, or management focused on critical functions only, unique opportunities arise for committing tax fraud. Risk assessments should be regularly reviewed, particularly within the context of COVID-19.

For businesses who have already performed a risk assessment, we can support with carrying out a review, which normally involves reviewing your existing policies and procedures as well as refreshing your current risk assessment to reflect any changes in the business.

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