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A Reminder: Corporate Criminal Offence

Photo of Lourens Du Plessis Lourens du Plessis
3 min

“What?” you may say, “we wouldn’t dream of doing anything that was criminal”. But the “Corporate Criminal Offence” (CCO) that we have in mind can be committed by doing nothingIt is one of those things that you can slip into without realising it. Doing nothing isn’t an option.

What is this Offence?

Since 2017, where a charitable incorporated organisation (CIO), charitable company or any other corporate body or partnership fails to prevent the facilitation of tax evasion, that body opens itself up to criminal charges, even when that tax evasion is undertaken by a third party.

What is criminal has not changed. But who is held accountable for the tax evasion has.

If my charity doesn’t evade tax, how can there be a problem?

In general, charities are well behaved! They seek to pursue public good rather than cheat on their taxes. But this is not the point. An offence under the 2017 law is committed where the charity fails to prevent the facilitation of tax evasion either by the charity or by anyone associated with it. It is the “associated with it” rule that is most likely to cause problems.

For these purposes, ‘tax’ includes both UK and overseas tax.

“Associated” is defined in law as:

  • an employee of the charity acting in the capacity of an employee,
  • an agent of the charity acting in the capacity of agent, or
  • any other person who performs services for or on behalf of the charity who is acting in the capacity of a person performing such services.

Example

Consider the situation where the church arranges for a plumber to come and repair the church boiler. The plumber gives a quote for the work but says that it would be £200 cheaper if the church pays cash. The treasurer readily agrees. Why did the plumber give a cheaper price? It is most likely because they will not declare the income from the repair job for income tax and VAT purposes – which is tax evasion. The church (through the treasurer) has facilitated that tax evasion and, as a result, may be guilty of a criminal offence.

Defence against a criminal charge

The law requires positive action on the part of all charities within the scope of the CCO. It is a statutory defence to show that the charity had reasonable procedures in place to prevent the facilitation of tax evasion, including by persons ‘associated’ with the charity, as above.

Guidance

The Government has published statutory guidance containing the procedures that relevant bodies can put in place. The prevention procedures are informed by six guiding principles:

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

In addition to the Government’s statutory guidance (which is comprehensive and should definitely be consulted), we have published two short Briefing Papers on our website:

The (tax) Corporate Criminal Offence: Implications for churches

The (tax) Corporate Criminal Offence: Implications for small, incorporated charities

Each of these gives a brief overview of the law, examples of possible offences (including using Gift Aid), and an example of the possible contents of a risk assessment and associated mitigation procedures.

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Written by

Lourens du Plessis

Lourens leads our teams who guide and strengthen churches and Christian charities with their governance and finances. Our professional services include independent examinations of charities’ accounts, an award-winning payroll bureau, consultancy and governance advisory services and helping charities get registered with the Charity Commission. He joined Stewardship in 2020 and brings with him a wealth of experience in both the charity and commercial sectors. He’s a member of the Charity Community Advisory Group of the Institute of Chartered Accountants in England and Wales, and regularly interacts with regulators in the sector.

Before joining Stewardship he worked for an international church developing governance and financial stewardship for various ministries. Prior to that Lourens had a senior role at a Big Four firm in the City, advising international investment banks. He is a qualified Chartered Accountant and has a postgraduate degree in Theology.

Lourens grew up in South Africa, but has spent the majority of his working life in London.  He is a member of the International Presbyterian Church in Ealing. He is also a trustee of a number of other churches and charities, including a new pregnancy counselling centre, and he’s involved in initiatives to help Christians better integrate their faith and work.

Lourens supports causes which encourage bringing the gospel to people in his neighbourhood and to the ends of the earth, and particularly supporting persecuted Christians around the world.

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