What is Tax Avoidance?
Any legal method of reducing taxpayers liability.
What are Determinants of Tax Avoidance?
- Anti-avoidance legislation closes tax “loopholes”
- Certain tax avoidance schemes must be disclosed to HMRC.
- General Anti-Abuse Rule (GAAR), abusive tax avoidance arrangements to be challenged
What is Tax Evasion?
Illegal, seeks to pay less tax than due by deliberately misleading HMRC.
Failing to notify HMRC of liable tax.
Suppressing info.
False info by deducting expenses not incurred or claiming CA on plant not purchased.
What is Money Laundering?
Process where criminal property is exchanged for ‘clean’ money/assets with no obvious link to criminal origins.
ICAEW members must prevent, recognise and reporting money laundering.
POCA 2002 –> SOPCA Act 2005 and Money Laundering Regulations 2017.
What is POCA?
Criminalises all forms of money laundering.
Creating other offences, e.g. failing to report a suspicion of money laundering and “tipping off”.
What is Determined as Engaging in Money Laundering According to POCA?
- Conceal, disguise, convert, transfer, or remove criminal property.
- Acquire, aware of, control, or use any criminal property.
What is Included as Criminal Property and therefore Considered Money Laundering?
- Proceeds of a crime (tax evasion)
- Benefits obtained through bribery & corruption, or operation of a criminal cartel
What are the Anti-Laundering Rules and Penalties?
- Professional accountants obligated to report suspicion of money laundering.
- Money Laundering Reporting Officer (MLRO) completes internal report for accounting firm.
- Suspicious Activity Report (SAR) made to National Crime Agency about suspicion of money laundering.
- Tried at Crown Court depending on severity, attracting unlimited fines & imprisonment.
- Failure to disclose info = unlimited fines & 5yrs jail.
