The Long Arm of UK Financial Crime Enforcement - Disclosure facilities, anti-corruption and AML essentials (23 September 2015, 12.00pm - 2.00pm, Intellioffices, Level 11, 146 Robinson Road)

Did you know that the UK government now has a dedicated fiscal crimes officer based in Singapore as part of the UK’s clamp down on aggressive tax avoidance and tax evasion? Participants at this well-attended seminar had the pleasure of meeting Mr David James, HMRC Fiscal Crime Liaison Officer, British High Commission in Singapore, face-to-face as well as hearing from a veteran UK tax and corporate crimes litigation lawyer, Mr Neil McInnes who is a partner at Pinsent Masons MPillay, Singapore.

Mr McInnes spoke on the continuing directional trend of increased fiscal transparency in the UK, especially in this new era of automatic information exchange. In particular, he highlighted the rising use of deferred prosecution agreements (DPAs) in the UK, following the success of the US Department of Justice’s use of DPAs in the Swiss Bank program. Two UK DPAs are expected to be announced shortly, which will feature some of the following:

·       Deferral of corporate criminal liability only, without any guarantee of settlement and requiring full disclosure

·       Implementation of a judge-supervised process which provides safeguards that the DPA is “in interest of justice” and is fair, reasonable and proportionate

Importantly, the increased use of DPAs signals a move away from the more onerous task of establishing corporate criminal liability in English law towards a conception closer to the US vicarious liability, where a company may more readily be found liable for the actions of its employees.

Mr McInnes also discussed the UK’s recently proposed new tax offences and enhanced penalties for tax evasion which include:

·       Strict liability criminal offence for individuals with a possible imprisonment sentence

·       Corporate liability for actions of a company’s employees and the company’s failure to prevent tax evasion, or failure to prevent facilitation of tax evasion

·       Application of the offence to any company whose agents (employees, contractors and authorised intermediaries) facilitate tax evasion overseas. This means that geographical location of the agent is irrelevant if the firm has a UK presence. However, having taken reasonable steps to prevent facilitation of tax evasion has been proposed as a corporate defence.

Providing the perspective of the UK HMRC, Mr James highlighted a noticeable and important shift of position in the UK regarding tax evasion. Whereas tax non-compliance cases in the past may have attracted mere civil liability, there was now keen political pressure to prosecute such cases to its fullest extent and to assign criminal liability, including imprisonment terms. This adds further impetus to the need for advisors to urge clients to regularise their UK financial affairs sooner rather than later.

Mr James noted that regularisation opportunities under the Liechtenstein Disclosure Facility (LDF) remained available, with the most favourable conditions available only until 31 Dec 2015. The most valuable feature of the current LDF regime was the ability to secure immunity from prosecution, especially given UK’s shift towards prosecuting tax cases going forward.  Between  2016 and Sept 2017, penalties under the revised LDF would increase, and immunity from prosecution would cease to become available. Post-Sept 2017, the LDF would cease entirely.  Mr James encouraged all advisors to assist their clients to review and scrutinise existing structures that were set up at a time when “things were done differently” to ensure they remained fit for purpose and appropriateness in the new normal of fiscal transparency. 

Indeed it remains to be seen if the long arm of Uncle Sam will be challenged by the possibly even longer arm of the UK HMRC going forward.

The seminar ended with a certificate award ceremony for the 29 recent graduates of STEP’s International Trust Management diploma program. Congratulations on our newly certified full STEP members!

Contributed by: Chan Ee Lin - Adjunct Professor, Singapore Management University



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