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Don’t get caught out over new tax evasion facilitation advice

HMRC’s latest guidance on self-reporting criminal facilitation of tax evasion affects accountancy firms as well as companies, but only applies to those that have been given relevant authority, reports Julia Penny.

Julia Penny

June 2019

The Criminal Finances Act 2017 brought in the corporate offence of failing to prevent the criminal facilitation of tax evasion in April 2017. In February 2019 HMRC issued guidance about self-reporting an organisation’s failure to prevent such tax evasion.

The reporting regime set out is only available to those that the organisation has given authority to, such as directors or an external adviser, such as the organisation’s accountant. It is not a mandatory regime; the organisation can decide to stay silent, but the benefit of self-reporting is that it may help to demonstrate that the company has appropriate procedures in place, which is a defence for the corporate offence.

It may also be viewed favourably when considering any penalties to be applied to the organisation, should it be found guilty.

But what if you are an accountancy firm?

Clients who are relevant organisations for the purposes of the criminal finances act, for example companies, LLPs, partnerships or other organisations, must ensure they have appropriate procedures to prevent the criminal facilitation of tax evasion. You may wish to advise them of the merit of self-reporting any such facilitation of which they become aware - with their authority you could assist in the reporting itself.

The self-reporting regime does not allow someone without the authority of the company to report the facilitation to HMRC, so you should only help if asked to do so by the client.

Note that this self-report to HMRC is not the same as a Suspicious Activity Report (SAR), which is made to the National Crime Agency (NCA). If you become aware of, or are suspicious that there has been, tax evasion at a client, then even if they decide to self-report you will still need to make an SAR to your Money Laundering Reporting Officer (MLRO), who will then report to the NCA if appropriate.

The guidance provided by HMRC suggests that an organisation may wish to take legal advice before reporting, as well as fully read all the guidance. The self-report is then made through the government gateway and should only include information of which you are already aware.

The guidance emphasises that you shouldn’t seek to gather more information, as this could put you at risk.

Julia Penny is a London member of ICAEW Council

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