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Corporate Criminal Offence (CCO) Legislation – What Is It?Written on June 21, 2021 by Kirk Rice LLP

Corporate Criminal Offence (CCO) Legislation – What Is It?

The Criminal Corporate Offence (CCO) legislation took effect on 30 September 2017. With the legislation in its 4th year, now is the time to review how HMRC is implementing the regulations and what businesses can do to safeguard themselves from falling foul of these rules.

The CCO applies to all companies and partnerships regardless of their size. So any UK business, be it UK incorporated or a foreign entity doing business in the UK, will be within the scope of the rules.

In summary, the legislation created two new corporate offences, one relating to the evasion of UK tax and one relating to foreign tax evasion. The legislation is very widely drawn and can apply to the evasion of any tax anywhere in the world.

The business has a strict liability under criminal law for failing to prevent the facilitation of tax evasion by one of its associates (employee, contractor or any other person providing services for or on behalf of the corporate). A defence exists of having ‘reasonable prevention procedures in place, and this is discussed further below.

A business that is found guilty of committing one of the offences can face an unlimited fine. However, it is vital to be aware that such a conviction can have more far-reaching implications such as limiting its ability to be awarded public contracts and severely tarnishing the business’s brand image.

We are starting to see more cases being pursued by HMRC. As of 27 May 2021, HMRC reported 14 live CCO investigations, with a further 14 currently under review. The investigations span ten different business sectors.

As noted above, the best defence available is for the business to ensure that it has implemented reasonable prevention measures. HMRC guidance sets out six key aspects to put in place such measures:

  • risk assessment
  • proportionality of risk-based prevention procedures
  • top-level commitment
  • due diligence
  • communication (including training)
  • monitoring and review

When putting into place procedures, it is considered vital that top-level management is fully committed to preventing associates from committing this offence. As part of this, senior management should ensure they are involved in the risk assessment procedures and ensure staff are provided with suitable training and support to follow these.

If you would like to discuss how you can be sure to protect your business from CCO please email info@kirkrice.co.uk to arrange a call with our Corporate Tax Director.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. Tax treatment is based on individual circumstances and may be subject to change in the future. Information is based on our current understanding of taxation legislation and regulations. Any levels and bases or, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.