The Criminal Finances Act 2017 make it a Corporate Criminal Offence for a business to fail to prevent tax evasion associated with it. It means that companies which fail to prevent the facilitation of tax evasion associated with their business are at risk – including those that refer you to dodgy tax schemes instead of compliant umbrellas.
It is well known that tax evasion schemes use the recruitment sector to promote them to contractors, something that HMRC is also very aware of. So it’s no surprise that HMRC has recently confirmed that the recruitment sector is being specifically targeted in their Corporate Criminal Offence (CCO) investigations.
If found guilty the perpetrators will face a criminal charge, an unlimited fine and reputation damage.
Recruitment firms should be worried as there are 35 potential investigations underway and it is only a matter of time until someone high profile is caught. In addition to recruitment, HMRC is also investigating the following sectors: accountancy and legal services, software providers and transport sector.
This is not about simply increasing the number of corporate prosecutions but changing industry practice and attitudes towards risk, encouraging organisations to do more to prevent tax crime happening in the first place. HMRC does not have a numerical target for these offences but will prioritise risks and sectors that will have the most impact on changing behaviour.
In some cases HMRC has been satisfied with explanations provided and that there has not been deliberate facilitation of tax avoidance. Importantly, these investigations have found other tax and regulatory offences that are now being pursued.