HMRC has issued a comprehensive update of its criminal investigation policy, including updates relevant to its attempts to tackle disguised remuneration and tax avoidance schemes, and areas where criminal prosecution for such offences will be considered.
Regarding instances relating to avoidance schemes, HMRC says that it will generally pursue a criminal investigation rather than civil investigation in instances where “reliance is placed on a false or altered document or such reliance or material facts are misrepresented to enhance the credibility of a scheme”.
The policy also dictates that a criminal investigation will typically be pursued in instances “where deliberate concealment, deception, conspiracy or corruption is suspected” and where the case involves “the use of false or forged documents”.
Should the orchestrators of disguised remuneration schemes be convicted by HMRC, then others within the supply chain may be pursued relating to the charge of failure to prevent the facilitation of tax evasion. This corporate charge is a strict liability offence and comes with an unlimited fine.
This responsibility on behalf of those within the labour supply chain raises numerous issues for employment agencies that have dealings with umbrella companies, should these companies be operating as disguised remuneration schemes.
For example, if an agency within the supply chain is receiving rebate or incentive payments from non-compliant umbrella companies, then these payments could be seen as criminal proceeds. This is similar to recent revelations about “mini umbrella companies”, which were operating tax evasion schemes and bribing agencies with “kickback” payments in order to recommend them to contractors.
If agencies or others within the supply chain are found guilty of such offences, then they may be liable to receive an Account Freezing Order, potentially lasting for two years and putting the business at serious risk. Overall, the rules mean that agencies will likely have to take steps to ensure they are not unwittingly helping to facilitate tax evasion and putting themselves at risk of criminal charges.
Author: Steven English