The UK Government announced during its 2015 Budget that, it would introduce a new criminal offence applicable to companies who failed to prevent their agents from criminally facilitating tax evasion.
The main objective of this new company offence aims at overcoming the difficulties in attributing criminal liability to companies for the criminal acts of those who act on behalf of them.
This new offence essentially have three stages:
- Stage one: criminal tax evasion by a taxpayer (either a legal or natural person) under the existing criminal law (e.g. an offence of cheating the public revenue, or fraudulently evading the liability to pay VAT);
- Stage two: criminal facilitation of this offence by a person acting on behalf of the company, whether by taking steps with a view to: being knowingly concerned in; or aiding, abetting, counselling, or procuring the tax evasion by the taxpayer;
- Stage three: the company’s failure to take reasonable steps to prevent those who acted on its behalf from committing the criminal act outlined at stage two.
Aside from UK local company, it is also important for foreigner investors to be aware of this new offence, for their subsidiaries or branches in UK are also fallen within the applicable scope. Furthermore, tax evasion not only covers within the territory of UK but also worldwide taxation as long as such evasion acts are related to the UK entity.
For enquiry, please feel free to contact us. We are there to help solve your tax issues.