A survey commissioned by HMRC to evaluate the impact of the new corporate criminal offences of failing to prevent facilitation of tax evasion has found relatively low levels of awareness outside large businesses in the finance and insurance sectors, with only 24% of all businesses having undertaken a risk assessment of their exposure from those providing services on their behalf.
HMRC has published the findings of a survey commissioned to evaluate the impact among UK companies of the new corporate criminal offences of failing to prevent facilitation of tax evasion, introduced by the Criminal Finances Act 2017 with effect from 30 September 2017. The survey was carried out by Ipsos MORI and involved telephone interviews with senior individuals in 1,002 UK companies and partnerships across all sectors. The key objectives of the research were to examine:
awareness of the new corporate criminal offences; and
the extent to which the introduction of the corporate criminal offences has resulted in changes to the culture and behaviour of companies and partnerships.
The intention behind this research is to establish baseline data within the first year of these offences to help HMRC assess their effectiveness over time.
The responses indicated that large businesses, multinationals and firms within the finance and insurance sector were the most engaged with the Act.
Of all businesses surveyed, 34% said they were aware of the new tax evasion offences introduced by the Act, while only 9% thought the Act was relevant to them ‘to a great extent’. Some 20% of businesses surveyed had made changes to their operations directly in response to the Act, with 11% saying that they were planning to introduce changes or make further changes in the next 12 months.
Around 55% of businesses had at least one of five specified procedures in place (due diligence procedures; senior officers with responsibility for managing risk; disciplinary procedures; oral briefings; written staff policy documents). Due diligence procedures associated with specific transactions or customers (34%) and senior officers with responsibility for managing risk (30%) were the most common.
Only 19% of respondents were aware of the facility on the gov.uk website through which companies and partnerships can self-report failures to prevent the facilitation of tax evasion.
The report suggests that a ‘fundamental step’ for businesses in implementing prevention procedures is assessing the potential risks from facilitation of tax evasion by those providing services on their behalf. The survey revealed only 24% had assessed this risk and most businesses did not have risks formally documented. In this regard, only 8% of organisations had undertaken training or communications in the last 12 months, providing scope for further behaviour changes.
Overall, the report suggests that while awareness of the corporate criminal offences is currently relatively low across UK companies and partnerships as a whole, the findings indicate that their introduction has, ‘to some extent’, encouraged businesses to consider action to prevent the facilitation of tax evasion, who would not normally have done so.
While views varied among different types of businesses on the factors which may influence behavioural change in relation to the new offences, HMRC guidance and help was most frequently cited as a facilitator to implementing the necessary procedures.
Penny Simmons, a tax lawyer at Pinsent Masons, commented: ‘In many ways the findings are not unexpected, particularly that larger organisations and those operating in higher risk sectors such as finance and insurance have taken greater care in responding to the offences’. Of more concern, however, was the fact that fewer than a quarter of businesses had undertaken any form of risk assessment almost a year after the offences were introduced.
‘This figure is all the more worrying given that HMRC has confirmed that it began its first criminal investigations under the offences in November and has also made it clear on a number of occasions that a business will have to provide evidence that it has conducted a risk assessment when trying to rely on the defence of having reasonable prevention procedures’, Simmons said.
The report, Evaluation of corporate behaviour change in response to the corporate criminal offences, is available at bit.ly/2Fnxt3o.
A survey commissioned by HMRC to evaluate the impact of the new corporate criminal offences of failing to prevent facilitation of tax evasion has found relatively low levels of awareness outside large businesses in the finance and insurance sectors, with only 24% of all businesses having undertaken a risk assessment of their exposure from those providing services on their behalf.
HMRC has published the findings of a survey commissioned to evaluate the impact among UK companies of the new corporate criminal offences of failing to prevent facilitation of tax evasion, introduced by the Criminal Finances Act 2017 with effect from 30 September 2017. The survey was carried out by Ipsos MORI and involved telephone interviews with senior individuals in 1,002 UK companies and partnerships across all sectors. The key objectives of the research were to examine:
awareness of the new corporate criminal offences; and
the extent to which the introduction of the corporate criminal offences has resulted in changes to the culture and behaviour of companies and partnerships.
The intention behind this research is to establish baseline data within the first year of these offences to help HMRC assess their effectiveness over time.
The responses indicated that large businesses, multinationals and firms within the finance and insurance sector were the most engaged with the Act.
Of all businesses surveyed, 34% said they were aware of the new tax evasion offences introduced by the Act, while only 9% thought the Act was relevant to them ‘to a great extent’. Some 20% of businesses surveyed had made changes to their operations directly in response to the Act, with 11% saying that they were planning to introduce changes or make further changes in the next 12 months.
Around 55% of businesses had at least one of five specified procedures in place (due diligence procedures; senior officers with responsibility for managing risk; disciplinary procedures; oral briefings; written staff policy documents). Due diligence procedures associated with specific transactions or customers (34%) and senior officers with responsibility for managing risk (30%) were the most common.
Only 19% of respondents were aware of the facility on the gov.uk website through which companies and partnerships can self-report failures to prevent the facilitation of tax evasion.
The report suggests that a ‘fundamental step’ for businesses in implementing prevention procedures is assessing the potential risks from facilitation of tax evasion by those providing services on their behalf. The survey revealed only 24% had assessed this risk and most businesses did not have risks formally documented. In this regard, only 8% of organisations had undertaken training or communications in the last 12 months, providing scope for further behaviour changes.
Overall, the report suggests that while awareness of the corporate criminal offences is currently relatively low across UK companies and partnerships as a whole, the findings indicate that their introduction has, ‘to some extent’, encouraged businesses to consider action to prevent the facilitation of tax evasion, who would not normally have done so.
While views varied among different types of businesses on the factors which may influence behavioural change in relation to the new offences, HMRC guidance and help was most frequently cited as a facilitator to implementing the necessary procedures.
Penny Simmons, a tax lawyer at Pinsent Masons, commented: ‘In many ways the findings are not unexpected, particularly that larger organisations and those operating in higher risk sectors such as finance and insurance have taken greater care in responding to the offences’. Of more concern, however, was the fact that fewer than a quarter of businesses had undertaken any form of risk assessment almost a year after the offences were introduced.
‘This figure is all the more worrying given that HMRC has confirmed that it began its first criminal investigations under the offences in November and has also made it clear on a number of occasions that a business will have to provide evidence that it has conducted a risk assessment when trying to rely on the defence of having reasonable prevention procedures’, Simmons said.
The report, Evaluation of corporate behaviour change in response to the corporate criminal offences, is available at bit.ly/2Fnxt3o.
