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

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

14 March 2019

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 introduced 18 months ago and 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.

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.

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.

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