HMRC recently announced a day of action targeting suspected facilitation of tax evasion and money laundering offences which they believe amount to more than £200million in the UK alone.
Their press release explained:
"The action occurred as part of a series of investigations in Australia, Canada, the Netherlands, the US and UK into a Central American financial institution, whose products and services are believed to be facilitating tax evasion and money laundering for customers across the globe."
In the UK a search warrant was executed and a 59 year old man from Stoke was arrested on suspicion of cheating the public revenue and money laundering as part of the day of action.
The First Operation of Global Tax Enforcement known as J5
This was announced as the first major operational activity for the Joint Chiefs of Global Tax Enforcement known as J5. The group brings together leaders of tax enforcement authorities from Australia, Canada, the UK, US and the Netherlands and was established to tackle international financial crime and money laundering.
HMRC reported that significant information has now been gathered as a result of the joint investigations.
Simon York, Director of HMRC’s Fraud Investigation Service, said:
“Working together, HMRC and our J5 partners are closing the net on tax criminals, wherever they are, to ensure nobody is beyond our reach. The message to them is clear – the J5 are closing in.”
Some commentators might have been expecting more action from the J5 since its formation but it does serve as an example of how global investigations take a long time to come to fruition. How long until criminal charges are levied remains the question which will interest many tax crime practitioners given the very long length of time currently between arrest and charging decisions for domestic tax evasion offences.
Failure to Prevent Facilitation of Tax Evasion
In light of this kind of international action businesses should ensure that they focus on financial crime compliance.
The Global agency were specifically targeting facilitation of tax evasion in the day of action. The Criminal Finances Act 2017 brought in two new offences of failure to prevent the facilitation of tax evasion relating to UK and foreign taxes respectively.
We know from research commissioned by HMRC last year that many UK businesses are unaware of the Act and are at risk.
The offences are strict liability which means that it is not necessary for the prosecution to show that senior management were aware of the tax evasion facilitation by an associated person. Only those businesses that can demonstrate that they have reasonable preventative procedures in place have a defence in law.
If you are a business that is yet to address its obligations then time is clearly of the essence. If you are not wholly confident about the procedures you have in place or have nothing in place at all then you need to act quickly. We can help organisations that find themselves without all or some of the necessary procedures in place at this late stage.
If you would like to discuss any of the above issues please do not hesitate to contact us.