Enhanced UK scrutiny on corporate tax evasion procedures

In this article published by International Tax Review, London-based Dechert white collar litigators Tim Bowden and Richard Hodge examine the increase in tax evasion enforcement because of the widening COVID-19 financial deficit in the UK. 

UK tax enforcement authorities were given a powerful tool under the Criminal Finances Act 2017 to prosecute companies for tax evasion. Part 3 establishes corporate criminal offences (CCOs) for “failing to prevent” the facilitation of UK or foreign tax evasion by a corporate’s “associated persons”.

As with the similar model of offence under section seven of the Bribery Act 2010, visible enforcement has had a relatively slow start. However, after a two-year hiatus, HM Revenue and Customs, the UK’s tax authority, has opened its corporate investigations ledger, recording nine CCO investigations by the end of December 2019, with a further 21 opportunities under review. In his 2020 Budget, Chancellor of the Exchequer Rishi Sunak announced plans for significant recruitment of HMRC compliance officers and investment in tax investigation technology.

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