HMRC unveils ‘tell us you corporately evaded tax’ tool

A corporate criminal evasion offence with “huge implications” for contractor supply chains has been given a tool for users to tip-off HMRC if they suspect it has been committed.

Unveiled by the Revenue, the online mechanism via the government’s gateway system lets organisations “self-report” their failure to prevent the facilitation of tax evasion.

But HMRC says that the person using the tool -- a whistle-blower effectively -- must first get the ‘OK’ of the outfit they are accusing of committing the offence before they report it.

'Why would anyone do this?'

The FCSA is among those puzzled about how people will go about asking a firm for permission to shop that firm to HMRC, or why a firm would give permission to be reported.

“Why would anyone do this?” asks Julia Kermode, chief executive of the Freelancer and Contractor Services Association (FCSA), in an online debate about the tool, which HMRC says takes about 40 minutes to run.

The debate heard that an individual might ‘self-report’ their outfit if they want to ‘do the right thing,’ having joined a new business only to discover the facilitation of tax evasion.

'Ignorant'

Yet HMRC emphasises that to be a criminal act, the activity reported via the tool should not include what its officials deem “the accidental, ignorant or negligent facilitation of tax evasion.”

One incentive to use the tool is that HMRC says the user “will not be guilty of failing to prevent the facilitation, despite the fact they are self-reporting on behalf of the company or partnership.”

Yet if successfully prosecuted, the company or partnership could face unlimited financial penalties, ancillary orders such as confiscation orders or serious crime prevention orders, the government has said, among other implications.

And a company or partnership that self-reports does not get any form of guarantee that their organisation will not be prosecuted, says Ms Kermode, citing the government’s notes underneath the tool on a HMRC webpage.

'Getting others to do HMRC's job'

Individuals considering using the tool to report to HMRC the company or partnership which has given them approval to make such a report against them are advised to first seek professional legal advice.

The government also recommends such individuals read its official guidance on the offence – an offence which makes businesses criminally liable if their employees, agents or third parties (including “associated persons”) facilitate tax evasion while acting on the businesses’ behalf.

Contractor Mike Gibson, a former campaigner against IR35, believes that the self-reporting tool is little more than the latest, unsurprising attempt from HMRC to ‘get other people to do its job.’