Targeting the facilitators of tax evasion - Tax and Legal blog

Targeting the facilitators of tax evasion

Tax authorities have begun to focus not only on punishing tax evaders, but also on targeting the intermediaries that facilitate tax evasion. The G7 Bari declaration of 13th May re-emphasised this approach, with an added focus on those who seek to circumvent the new Common Reporting Standard (CRS) requirements.

In recent years, the US has targeted intermediaries via its Swiss Bank Programme. Now the UK has introduced measures which target businesses that “fail to prevent” the facilitation of tax evasion and which carry potentially unlimited fines. These new UK laws are worthy of consideration both because they have global reach, and as an example of an approach which may spread to other jurisdictions

The new legislation is modelled upon 2010 UK anti-bribery legislation; another illustration of the trend towards treating tax evasion as being akin to other financial crimes.

From September 2017 the UK will have two new 'corporate criminal offences' enabling the prosecution of businesses that “fail to prevent” (FTP) the facilitation of tax evasion. The new FTP offences are widely drafted so as to cover both the facilitation of UK and overseas tax evasion, and the actions of not just a business but also its agents and associated persons. Thus, a Swiss business that had a UK branch where an associated person facilitated German tax evasion would be exposed.

The definition of “associated person” covers all who perform services for a business, such as employees, agents, subsidiaries, distributors, or even joint ventures. The draft guidance indicates that the UK tax authority will not be constrained by contractual wording, and will instead look at the facts and circumstances.

Criminal facilitation can be active, for example specifically aiding a tax evader, or passive, for example an act of omission such as failing to act upon inaccurate or incomplete declarations of tax residence for the purposes of CRS.

The only defence will be to show that the business had implemented “reasonable procedures” designed to prevent its associated persons from facilitating tax evasion.

Six guiding principles determine what 'constitutes reasonable procedures'. These are:

  • Having a documented risk assessment
  • Proportionate and risk-based prevention procedures
  • Demonstrable top level commitment
  • Due diligence
  • Communication (including training)
  • Risk monitoring and review

As a result, UK businesses, particularly those in high-risk areas such as the financial sector are implementing compliance programmes. Alignment with existing anti financial crime programmes is key, particularly for those businesses managing a range of cross border tax risks. Early determination of a suitable approach so as to identify weaknesses and establish appropriate checks and controls will mitigate both the risk of fines and the costs of remediation.

There will always be persons who seek to evade tax and it is not always possible to prevent the actions of customers or agents. But the clear message is that you have to try. Swiss tennis fans might reflect on the Samuel Beckett quote that Stanislas Wawrinka famously adopted: “Ever tried. Ever failed. No Matter. Try again. Fail again. Fail better”. When it comes to avoiding being penalized for the tax evasion of others, those who make pre-emptive efforts to manage the risks might “fail better” than those who don’t.


Markus Weber - Partner, Financial Services Tax Leader Switzerland

Markus heads the Financial Services Tax practice. He has more than ten years of experience in advising financial institutions in the banking, insurance and asset management sector, covering the full range of relevant taxes. Prior to joining Deloitte, he was the managing director of a fund management company, followed by a role as executive director in the group tax department of a leading Swiss bank, where he was in charge of compliance with cross-border U.S. tax regulations.



Brandi Caruso - Director, Financial Services Tax 

Brandi heads the Tax Transparency offering within the Financial Services Tax practice across Switzerland, responsible for services related to QI, FATCA, CRS, and 871(m). She is a technical advisor and a subject matter expert to a number of Swiss-based trust companies and banks and leads the Deloitte Trust Forum. She has more than 15 years of experience with Deloitte in the US, UK, and in Switzerland.


Richard Geldart

Richard Geldart - Director, International Private Wealth and Entrepreneurs

Richard is working within the International Private Wealth and Entrepreneurs team of Deloitte in Switzerland. He has worked with international families, multi and single family offices, trustees and private banks for over 15 years specialising in cross border tax matters. He is a frequent speaker at industry events in Switzerland and in key financial centres. Prior to relocating to Switzerland he was based in London.



Craig Thomson - Senior Manager, Deloitte Private

A UK tax specialist and former UK tax authority official, Craig has been based in Switzerland since 2012. He has overseen tax transparency projects in a number of countries with a particular focus on the Financial Sector. He is currently working with both HNW family offices and financial institutions as taxation is transformed by digitalisation and information exchange



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