UK To Fast-Track New Tax Evasion Offense

The UK Government will bring forward plans to introduce a new criminal offense for companies that fail to prevent their staff from facilitating tax evasion.

Prime Minister David Cameron said that the offense will be introduced in legislation this year. Cameron explained: “This Government has done more than any other to take action against corruption in all its forms, but we will go further. That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.”

The move comes after the leak of 11.5m documents from Panamanian law firm Mossack Fonseca that pertain to bank accounts and companies in 21 offshore jurisdictions. The UK Government has also announced the launch of a task force to investigate any evidence of illegality that has emerged from the so-called “Panama Papers.”

Plans for the new criminal offense were first announced in Chancellor George Osborne’s March 2015 Budget. In December 2015, the Government published the responses to its consultation on the proposal and announced there will be another consultation on the legislation, which was slated to be published in early 2016.

The Government said: “Corporate knowledge of criminal facilitation of tax evasion by a representative can range from there being no knowledge due to inadequate supervisory mechanisms, through to the provision of facilitation services being a core part of the corporation’s business. We are looking to tackle the full spectrum of behavior by incentivizing good corporate governance and ensuring the necessary legislation is in place to allow corporations who are complicit in the facilitation of evasion to be held accountable.”

“The Government is mindful of the need to ensure that the offense is broad enough to capture the behavior it is seeking to prevent, but not so wide as to unduly burden corporations who are within the scope of the offense.”