Corporate Criminal Offence
Failure to prevent the facilitation of tax evasion.
To be or not to be…a body corporate
30 September 2021 marked the four-year anniversary since the implementation of the Corporate Criminal Offence legislation as per part 3 of the Criminal Finance Act 2017 (‘CFA 2017’).
12 November 2021
Given the wide-ranging net of legislation and that “the Government believes that relevant bodies should be criminally liable where they fail to prevent those who act for, or on their behalf from criminally facilitating tax evasion”, are all relevant bodies content that they are complying with the legislation as required? Below we consider what constitutes a relevant body.
In accordance with the legislation at s.44 CFA 2017, the legislation states it applies to relevant bodies where “Relevant body” means a body corporate or partnership (wherever incorporated or formed).”
The term body corporate is not defined within CFA 2017, nor in other tax legislation that we have reviewed. HMRC’s guidance at CTM00510 confirms this and goes on to say “Nor is there any definition of a body corporate, though it appears to mean a legal person of full capacity distinct from its members with perpetual succession created by, or observing provisions required by authority, whether Crown or Parliament.”
Correspondingly, we have sought to take the view that corporate bodies in the UK entail at least the following:
- Entities incorporated under the Companies Acts
- Entities incorporated or operating under Act of Parliament e.g. the Port of London Authority, the National Coal Board, the Atomic Energy Authority, the Independent Television Commission, the Post Office, etc
- Entities incorporated or operating under specific Acts of Parliament e.g. Building Societies Acts, the Industrial and Provident Societies Acts, the Credit Unions Act, the Further and Higher Education Act and the Limited Liability Partnerships Act, etc
- Entities incorporated or operating under a Royal Charter e.g. the British Broadcasting Corporation, the Institute of Directors and the British Standards Institute
Compliance with the Corporate Criminal Offence legislation does not take retroactive effect. Until a tax evasion-based risk assessment is undertaken and reasonable preventative procedures are implemented, a relevant body continues to be exposed to unlimited fines and a criminal conviction.
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Please feel free to get in touch to have a no obligations call to better understand the remit of the Corporate Criminal Offence legislation and what your organisation may want to do.