Monthly Archives: June 2017

Business, Government, Legal, Society, Taxation

New tax offence to be made within Criminal Finances Act 2017

TAX EVASION

The UK Government is expected to bring into force a new tax offence in the Criminal Finances Act 2017. It is likely to become law in September.

What is startling about the new offence is that it will make a business guilty as a result of the criminal conduct of its employees and others who may act on its behalf.

Where an individual facilitates tax evasion the business will be guilty of failing to prevent that facilitation unless it can demonstrate that, at the time of the employee’s conduct, it had appropriate procedures in place to prevent facilitation arising.

This new offence will have an immediate impact for many firms. Implicitly, it also shows the UK Government’s preferred direction of travel for corporate liability, i.e. to criminalise business for the actions of connected persons.

The new tax offence will be of concern to banks, accountants, Independent Financial Advisors, and to anyone providing tax advice. Businesses are now eager to know what they should have in place to make sure that employees and others who act on their behalf are not facilitating tax evasion for clients and customers. They will also want to know how they can show that they have taken every reasonable step to prevent the facilitation of tax evasion in the first place. An organisation that is criminalised because of the actions of its employees or third parties will have serious implications for its long-term future and health.

There are some easy first steps that businesses can take to strengthen their position. Policies and procedures in place at present should be reviewed, with an emphasis on explaining to people what is and is not acceptable. These should be updated if it is deemed necessary in clarifying the position. Any procedural improvements should be freely communicated to all employees and others providing tax services for the business.

To understand the wider direction of travel for corporate liability we need to understand why there is a need for change. The historic approach to successfully prosecute a company required the identification of a person in the business who possessed a “directing mind and will” and who, specifically, condoned or was aware of the crime. Known as “the identification doctrine” there are a number of difficulties with applying this approach. For example, it may not be difficult to identify the ‘directing mind’ in a family-owned run business where all of the major decisions are taken by a small group of people. It is quite another for a prosecutor to identify the directing mind within a global business that has a complex structure and sophisticated approach to decision-making.

The new offence follows the same methodology and approach as the Bribery Act.

The UK Government has also been consulting on wider reform of corporate crime. One of the options being given serious consideration is a wider roll-out of the “failure to prevent” approach across the spectrum of economic crime. This will place an onus on a business not only to show that it has done no wrong, but also to demonstrate that the organisation is properly policing its employees and others acting on its behalf. Whilst not quite the end of the presumption of innocence until proven guilty, any firm who allows their employee or connected person to break the law had better have a very good story to tell.

 

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Britain, European Union, Finance

Macron tells British PM that UK can ‘always’ change its mind on Brexit

FRENCH-BRITISH RELATIONS

French President Emmanuel Macron Receives British Prime Minister Theresa May At Elysee Palace

The summit in Paris was intended to set out a joint approach to tackling terrorism and online radicalisation.

The French President, Emmanuel Macron, has told Theresa May that the door is “always open” for the UK to change its mind about Brexit.

Emmanuel Macron appeared to hold out the prospect of allowing Britain to re-enter the EU as the pair held a joint news conference in the garden of the Elysee Palace in Paris.

Mr Macron said: “Of course the door remains open, always open, until the negotiations come to an end.”

But he stressed that “once the negotiations have started, we should be well aware that it will be more difficult to move backwards”.

Their first bilateral meeting had the uncomfortable backdrop of Mrs May – abroad for the first time since losing her majority – meeting the President following his recent comfortable election victory and on the brink of big gains for his party in parliament.

It comes as the UK’s Brexit strategy has been thrown into doubt by the shock election result, with pressure on Mrs May from factions within and outside her party to water down her threat to withdraw Britain from the EU with “no deal”.

The Prime Minister insisted that the Brexit negotiations – due to start next week – would start on time and that there would be no requests for a delay from the British side.

But she dodged a question on whether she now intended to pursue a “soft Brexit”, saying: “We want to maintain a close relationship and close partnership with the EU and individual member states.”

She added that after the election there was a “unity of purpose that having voted to leave the EU, that the Government gets on and makes a success of it”.

The President – asked if he believed that is what Mrs May intended as the leader of a minority Government – said it was for her to comment on the UK’s intentions.

Mrs May is said to be close to formalising a confidence and supply agreement with the Democratic Unionist Party, which has reservations about leaving the EU Customs Union and would refuse a hard border with the Republic of Ireland.

The summit in Paris was intended to set out a joint approach to tackling terrorism and online radicalisation, including levying hefty fines on the tech giants such as Facebook, Twitter and YouTube for failing to remove extremist content.

Echoing some of the rhetoric from British ministers about the need to allow the security services to access encrypted messages, Mr Macron said the intelligence agencies must be able to access digital content “no matter where it is located”.

Both leaders have stressed their “solidarity” in the face of terrorism. Mrs May said that “nowhere is our co-operation closer than in the area of defence and security”, with both countries leading international efforts to attack Islamic State with airstrikes.

Earlier, the German finance minister Wolfgang Schauble said in an interview with Bloomberg that if the UK changed its mind on leaving the EU, “of course they would find open doors” in Europe.

 

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Britain, Government, Politics

Theresa May’s costly miscalculations will be her undoing

BRITAIN

If the Prime Minister manages to survive what is undoubtedly the most turbulent period in British political history in over 40 years, the words ‘strong and stable’ will haunt the rest of Theresa May’s career in public office – particularly after promising us stability.

If things weren’t so serious they would be laughable. Several warning signs over the past few years now look in hindsight to have been more like sirens. Mrs May backed the Remain campaign, until she launched her leadership campaign with the slogan ‘Brexit means Brexit’. There was no need for a general election, she insisted, until she changed her mind. In an attempt to garner support from undecided voters, the Conservative Party wheeled out the sensitive subject of social care costs and how they intended to seek a bigger contribution from those who need support. Appearing without warning after the Conservative manifesto had been launched, the policy was then re-written just as abruptly following an outcry from traditional Tory voters.

But what we have in place of stability is inconsistency, and a real sense that Mrs May will do whatever she thinks necessary to protect herself. Whilst her immediate shift on Brexit was a recognition of a scenario she could not change because of the EU referendum result, no benefit of the doubt can be given over her about-turns on holding an election, and the so-called dementia tax. These reversals were motivated by her desire for power, rather than what was best for the country.

May’s self-interest was again to the fore over the last few days as her political advisers paid the price for electoral failure. The threat of a leadership challenge hovered over the Prime Minister if she did not remove them: many questions have been asked over the level of power these unelected advisers have been wielding, who were also central in the writing of the disastrous social care policy. And now we have the Prime Minister attempting to negotiate a deal with the Democratic Unionist Party . . . to keep her in power.

Yet, this posturing and scrambling around to find a way of securing a Commons majority is likely to be her undoing. The DUP maybe popular in Northern Ireland, but many in the rest of the UK will find the party’s values unpalatable. This includes senior figures in Mrs May’s own party, including former prime minister Sir John Major, and Scottish leader Ruth Davidson and Scottish Secretary David Mundell who have both voiced concern over the DUP’s position on gay rights.

Others, too, will likely object to the DUP’s opposition to women’s rights to have an abortion, and the influence of a party which attracts support from a loyalist paramilitary group.

There is a danger for the Conservative Party that the longer Mrs May clings on the more she will alienate the electorate, and the more attractive an opposition Jeremy Corbyn becomes. And with a further general election looking likely, the Prime Minister’s desperate measures are storing up trouble.

Assembling her Cabinet yesterday before attending a 1922 Committee meeting, the Prime Minister has endeavoured to press on with business as usual. Mrs May told her MPs she would serve them as long as they want her. As the full consequences of a deal with the DUP become clear, including the concessions to be given, she is likely to find that her own future, like most of her recent actions, doesn’t have many prospects beyond the short-term.

 

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