HMRC’s large business directorate opened investigations for possible ‘serious’ tax evasion into 27 of the UK’s top 2,100 businesses in 2017/18, according to figures obtained by Pinsent Masons.
HMRC defines ‘serious’ evasion as involving more than £50,000 in tax or where prosecution is possible.
Jason Collins, partner at Pinsent Masons, said: ‘These are very high figures of suspected tax evasion amongst the biggest companies in the UK. However, HMRC suspecting serious tax evasion has taken place is not the same as it actually having occurred. Our view is that no board and no head of tax would allow even the hint of tax evasion at their company. But, without proper controls, there is always the risk of a member of staff going rogue.’
The new corporate criminal offence of the Criminal Finances Act 2017 means that big businesses can be held criminally liable if they fail to prevent their employees, agents, or others who provide services on their behalf from criminally facilitating tax evasion, including potentially the group's own taxes. ‘Many businesses are still in the process of rolling out new procedures to comply with the Criminal Finances Act and, in doing so, irregularities could be uncovered,’ Collins said. ‘They will need to ensure they have robust prevention procedures in place, particularly with regards to their supply chains.’
Pinsent Masons added that recent evasion cases involving both UK and European large companies have been largely restricted to the financial services and professional services sector; for example, private bankers helping facilitate evasion by their clients. Outside of the UK, a European energy company has recently been accused of evading tax by miss recording sales of certain products.
Referrals for investigation into ‘serious’ tax evasion by wealthy individuals and mid-sized businesses have remained relatively flat in the last two years, with 228 cases in 2017/18 and 232 in 2016/17. Referrals involving individual taxpayers and small businesses saw a 24% increase to 3,204 cases last year compared to 2,586 the previous year.
Pinsent Masons says that the number of ‘big-ticket’ cases against high net worth individuals is likely to increase, thanks to the roll-out of the common reporting standard (CRS). Under this agreement HMRC will be provided with more information about UK residents with offshore bank accounts from foreign tax authorities. The first CRS information exchanges took place in September last year. From September this year, HMRC will receive data from the next tranche of CRS countries, such as Switzerland, Hong Kong and Singapore.
HMRC’s large business directorate opened investigations for possible ‘serious’ tax evasion into 27 of the UK’s top 2,100 businesses in 2017/18, according to figures obtained by Pinsent Masons.
HMRC defines ‘serious’ evasion as involving more than £50,000 in tax or where prosecution is possible.
Jason Collins, partner at Pinsent Masons, said: ‘These are very high figures of suspected tax evasion amongst the biggest companies in the UK. However, HMRC suspecting serious tax evasion has taken place is not the same as it actually having occurred. Our view is that no board and no head of tax would allow even the hint of tax evasion at their company. But, without proper controls, there is always the risk of a member of staff going rogue.’
The new corporate criminal offence of the Criminal Finances Act 2017 means that big businesses can be held criminally liable if they fail to prevent their employees, agents, or others who provide services on their behalf from criminally facilitating tax evasion, including potentially the group's own taxes. ‘Many businesses are still in the process of rolling out new procedures to comply with the Criminal Finances Act and, in doing so, irregularities could be uncovered,’ Collins said. ‘They will need to ensure they have robust prevention procedures in place, particularly with regards to their supply chains.’
Pinsent Masons added that recent evasion cases involving both UK and European large companies have been largely restricted to the financial services and professional services sector; for example, private bankers helping facilitate evasion by their clients. Outside of the UK, a European energy company has recently been accused of evading tax by miss recording sales of certain products.
Referrals for investigation into ‘serious’ tax evasion by wealthy individuals and mid-sized businesses have remained relatively flat in the last two years, with 228 cases in 2017/18 and 232 in 2016/17. Referrals involving individual taxpayers and small businesses saw a 24% increase to 3,204 cases last year compared to 2,586 the previous year.
Pinsent Masons says that the number of ‘big-ticket’ cases against high net worth individuals is likely to increase, thanks to the roll-out of the common reporting standard (CRS). Under this agreement HMRC will be provided with more information about UK residents with offshore bank accounts from foreign tax authorities. The first CRS information exchanges took place in September last year. From September this year, HMRC will receive data from the next tranche of CRS countries, such as Switzerland, Hong Kong and Singapore.
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