Following the publication in draft last October of HMRC’s guidance on the new corporate criminal offence of failing to prevent the facilitation of tax evasion, the final version has now been published and given statutory effect. A number of sections have been developed further, along with some phrasing changes, but overall the changes are mainly tweaks to the language and minor amendments to the order of the guidance.
Some of the key changes in the updated guidance include:
- The emphasis of risk assessment as a key part of the process. Critically, it is now explicitly stated that it must be “documented and kept under review”.
- The refinement of the definition of ‘associated person’ throughout the guidance as “a person acting in the capacity of a person associated with a relevant body”. This seeks to make clear that a person has to be acting in the capacity of associated person for the organisation to be liable for failing to prevent their facilitation offence.
- The description of what constitutes a UK nexus for the foreign offence appears to have been widened slightly, noting that having part of a business in the UK would constitute a UK Nexus; the draft guidance referred to a business having a UK permanent establishment giving rise to UK nexus.
- The examples have been developed further. In particular new wording has been added to the Gladstone example to explicitly cover an example where a UK branch attempts to put in place procedures aimed at staff working in the UK offices, but the wider bank (i.e. whole legal entity) does not. HMRC state that in this instance the bank may struggle to mount a reasonable prevention procedures defence.
- A new example has been added regarding payroll services, highlighting the risk which exists within firms’ back office and support functions. Organisations should assess all areas of their business for facilitation risk, not just areas with customer interaction.
- Within the actions for lower risk SMEs, the suggestion for financial crime training now specifically advises that prevention of facilitation training be included. This flags training as a key control to be included within reasonable procedures.
- HMRC note that the guidance is intended to be updated as and when required to aid understanding of the offences and the defence of reasonable procedures.
Whilst many organisations have been waiting for the guidance to be finalised, the final HMRC guidance now published is largely unchanged since the previous draft. Organisations therefore should not delay in finalising and executing plans to respond to the requirements of the Act prior to its commencement on 30 September 2017.
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