U.K. Plans Unlimited Fines for Helping Corporate Tax Evasion

  • Employers must show they took precautions to stop illegality
  • Legislation aims to stop management turning `blind eye'

Companies whose staff help people evade tax face being hit with unlimited fines under proposed U.K. rules.

HM Revenue & Customs on Sunday published a 59-page consultation setting out draft legislation for the new corporate crime of failing to prevent tax evasion. This makes employers liable for the actions of staff unless they put “reasonable” precautions in place to prevent such behavior.

“The new corporate offense aims to overcome the difficulties in attributing criminal liability to corporations for the criminal acts of those who act on their behalf,” the document said. “Attributing criminal liability to a corporation normally requires prosecutors to show that the most senior members of the corporation were involved in and aware of the illegal activity.”

The consultation said this had the effect of encouraging management in large corporations to “turn a blind eye to the criminal acts of its representatives in order to shield the corporation from criminal liability.” By making them liable by default, the aim is to encourage them to understand what staff are up to.

The new rules were proposed before the publication of the “Panama Papers,” which have dragged Prime Minister David Cameron’s government into a row about tax. He was forced to publish his personal records this month after his father was named in the leaked papers, in relation to an investment fund he set up in Panama.

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