In the wake of the Panama Papers leak, HMRC has launched a consultation on proposals to make companies criminally liable for failing to prevent tax evasion.
The consultation, Tackling tax evasion, concerns draft legislation published in December. The legislation would make it an offence for a company to fail to take adequate measures to prevent their agents from committing or helping to commit tax evasion in the UK or overseas. The consultation ends on 10 July.
Andrew Smith, partner at Corker Binning, says: “To be clear, the draft law is not a means by which the government could seek the prosecution of those implicated in the Panama Papers.
“The law would, for example, have no application whatsoever to the type of offshore investment scheme which David Cameron’s father managed. The law does not expand the definition of tax evasion under UK law, nor does it criminalise what some regard as immoral tax avoidance. However, the timing of the consultation is no doubt calculated to deflect the current waves of criticism concerning the government’s broader approach to combating tax fraud. Businesses can take limited comfort from the fact that the consultation emphasises that they need only act proportionately to the risks arising in their sectors, so as to develop compliance procedures which are reasonable rather than all-encompassing.”
Meanwhile, writing in this week’s NLJ, expert tax counsel Peter Vaines has denounced the calls for politicians to disclose their tax returns as an “absurd” response to the Panama Papers disclosure: “It is interesting that the focus has not been on those who have been hiding the proceeds of crime or corruption but on people who have put their funds in Panama and have paid all proper taxes which are due...The concern should be with bringing to account those who have broken the law rather than focusing on those people who have not.”
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