Business of tax

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Business of Tax

From 1st April 2019, all businesses above the VAT (Value Added Tax) threshold will need to keep their records digitally and submit their VAT return using software as part of Making Tax Digital (MTD).

The revolution in business tax is coming

Millions of us are already banking, paying bills, and interacting with customers and suppliers online. Going digital with business records and taxes is the next step to businesses getting more control over their business and their finances.

We know the vast majority of people want to pay what tax they owe, but too many often struggle to do so, with honest errors accounting for a large proportion of the tax gap figure – over £9 billion in 2015-16. The tax gap is the tax that should – in theory – be collected, against what is actually received and is money that would otherwise go towards paying for the UK’s public services.

By further digitising the tax system, we want to help businesses to significantly cut down on these errors.

The move to digital integration will make filing taxes feel like a by-product of running their business finances, helping them to be more effective and efficient, allowing businesses and their agents to devote more time and attention to more important business matters.

No change to ‘what’ information is provided, just ‘how’ it is provided The first step to achieving this will be submitting VAT returns using software. From 1st April 2019, all VAT registered businesses with a taxable turnover above the VAT threshold (£85,000) will need to keep their records digitally and send us their VAT return data from that software.

Those businesses that are registered for VAT but are below the VAT threshold are not required to use the MTD service, but can cho-

os e t o do so. availThis a b l e is a for landchange lords in Theresa Middleton for many the coming Director, Making Tax Digital for businesses, months. By Business, HMRC who will – in using softfuture – need ware to keep to keep their records digitally, records digitally and submit a quar(using software terly summary of or an app) and use income and expenses that software to send and an end of year us their VAT returns. report, businesses will But they will not need have more confidence to provide more informathat they have got their tion, nor provide it more tax right. They will also regularly, than they do now. receive tax calculations durWe are currently testing our ing the year, helping them to VAT service with volunteer busiplan and manage their cashflow nesses and agents and plan to more effectively. open the pilot more widely in the coming months.

What businesses and their

Move to quarterly summaries for Income Tax Our pilot for Income Tax is now open for self-employed businesses to join, and will be

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agents should do

We want to help businesses and their agents get ready for the change. They can start preparing for the VAT move now by: •Looking at how they can keep their

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records digitally, if they don’t already keep them in this way.

•Asking their software provider about when their software will be MTD compatible, if they currently use commercial accounting software.

•(For agents) creating an Agent Services account to enable them to sign clients up to MTD as well as access MTD on a client’s behalf. Information on creating an Agent Services account is available on GOV.UK. •(For more complex businesses) looking at their internal business operations to ensure their end-to-end process is digital.

We are working to build a list of compatible MTD software for VAT, which will be published on GOV.UK once the current private testing phase of the pilot is complete.

It may also be beneficial for those who are required to use MTD for VAT to also join for income tax on a voluntary basis. Depending on the software businesses choose, MTD will make it easy to generate this information at the same time as a VAT return is prepared, harmonising and consolidating a business’ interaction with HMRC. Clients of agents will not necessarily need to use the same software – lots of software products have been designed to work together - but the movement of VAT related business tax information between client, agent and HMRC must be digital.

Getting involved in the VAT pilot when it is opened up later this year will help a business prepare for the changes sooner, while for HMRC, the pilots for both VAT and Income Tax enable us to shape the service based on feedback from the pilot volunteers.

For agents it will give them more time to sign-up their clients rather than a rush to do this all at once.

We are introducing MTD on a voluntary basis for most businesses and only require our VAT customers above the VAT threshold, who already interact with HMRC quarterly and digitally, to sign-up from April 2019. In this way we are smoothing the transition to a modern, digital tax system.

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How is technology reshaping the tax function?

Chris Downing Head of Tax Transformation and Technology, KPMG in the UK

Chris Downing, Head of Tax Transformation and Technology at KPMG explains how technology is shaping digital tax and revolutionising the tax function as we know it.

What effect is technology having within the tax function?

Tax departments are having to change fundamentally. They’re not just full of accountants now. There’s a growing need for technology and data specialists because companies have to keep up with the digitisation agenda that is being set by Government.

In 10 years time, I think tax departments will be focused on data and technology because we’re just at the start of the wave, we’re nowhere near the end of it.

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Navigating the complexities of tax in the digital age Technology is making tax more complex but it could lead companies and tax authorities to a clearer, real-time understanding of their financial position.

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Where are the biggest changes in technology and tax likely to lead?

If you take a 10-year view, I think we will see tax authorities moving to real-time reporting for indirect taxes. It will be a little like PAYE in wages. You’ll have a situation where, when a company buys products and services, the indirect tax will almost instantly be paid when the transaction happens, rather than waiting a month or two to be reported.

It’s important because corporation tax is now a smaller proportion of the overall bill companies pay each year. Indirect taxes are now the second biggest tax companies pay, behind those on employment.

Moving to real-time would have a massive effect. You can only begin to imagine the positive improvement it would make for the Government’s cash flow, and the negative consequence this could create for tax payers’ working capital.

Could real-time tax fundamentally overhaul our systems? Could blockchain play a role?

The drive to digitisation of tax is going more in the direction of ensuring people don’t make mistakes on forms. It stands to reason that, if you have people writing things down, there is always going to be a certain level of human error.

However, with digitisation of tax systems you can move beyond spotting mistakes and get a better idea of who may need to be investigated. Systems could soon get to a level where they know what companies in the same sector as you with a similar head count and level of trade pay in tax. If there are significant differences, that could flag up where inspectors need to focus their efforts.

In terms of more ambitious technology, such as blockchain, I suspect we’ll see an emerging market make the leap first. This would mean there is a shared ledger so there would be the greatest level of transparency with every penny accounted for and tax bills worked out on actual transactions, not reported figures.

Could this lead to more complexity?

It already is, to be honest, and all companies want to do is be compliant across multiple regimes. This can be difficult with rules changing and compliance hurdles moving with them. It’s making the role of technology consulting far more important within the tax function because you need to pick the right platform for you.

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here is no getting away from two fundamentals; all businesses are now digital, at least in part, and taxing digital businesses creates a new set of challenges.

Getting a better understanding of these new, complex issues is not only necessary for current tax liabilities and compliance today, but can also help organisations plan more effectively for their future.

As Melissa Geiger, Partner and Head of International Tax at KPMG explains, the added complexity derives from businesses moving away from simpler ways of operating to deploy supply chains that can stretch around the world.

“Traditionally, you would have a factory or an office where your product or service was made and that made tax pretty straightforward to work out,” she says.

“You knew where the work was carried out, and by whom, so it was simple to determine where the value was added that created the profits that are being taxed. With digital businesses, however, it’s far more complicated. You may have teams collaborating all over the

Melissa Geiger Partner and Head of International Tax, KPMG in the UK

It’s a bigger issue than many companies might realise.

world, through different IT systems, and they might be adding value through intellectual property that is held on servers in various tax jurisdictions.”

Tax goes digital, principles remain Geiger says this is a bigger issue than many companies might realise. It is far too easy to assume that digital taxation concerns only apply to the tech

giants. However, simply being tech-enabled, as nearly every modern business is, adds extra layers of complexity.

If enterprises don’t seek expert advice and modelling of how their business operations impact tax, there is a real risk that authorities in different regimes could take competing views on the share of tax they are due.

“The main question has remained the same; enterprises have to establish where to attribute value,” she says.

“They need to know which activity added what proportion of profit and in which location.

It’s essential because the tax authorities in each country will want to tax profit they see as coming from operations within their jurisdiction. If businesses get it wrong, it’s very easy to be taxed twice.

“People often talk about tax arrangements bringing a tax bill down, and they may question how fair that is, but they don’t realise the opposite is often true where companies can pay too much tax.”

EU may take its own route Tax in the digital age creates challenges for businesses and governments and ideally any solution should have international consensus. That has not gone unnoticed by the authorities. Both the Organisation for Economic Co-operation and Development (OECD) and the EU have pushed forward the debate on how they think tax should be

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A changing future for business and tax

Tax disruptors

Digital disruptors 1

Customer-centricity

2

Industrial Revolution 4.0

3

Internet of Things

4

Digital workforce / Robotic process automation

5

Big data / Cognitive computing

6

Sector convergence

Operating model

1

New value creation models

2

Diverging policy approaches

3

Real-time tax reporting

4

Automation of tax processes

SOURCE: KPMG, 2018

handled in the digital economy.

But obtaining international consensus will take time and there is a risk that individual governments will introduce interim measures in the meantime. It appears the OECD and the EU may already be pulling in slightly different directions.

“The OECD focused on explaining the issues of taxing digital business, making sure they are understood before action is taken. Importantly, the OECD also outlined safeguards that should be followed if interim measures are to be introduced. This approach made a lot of sense to me,” says Geiger.

“Both the OECD and the EU thinking suggests tax authorities around the world should apply tax to where the value is added because that’s the most straightforward way of dealing with new business models.

“However, the EU is also moving towards an ‘interim solution’ of imposing a tax on revenues to secure what it sees as fair taxation. The EU moving ahead of the OECD in this way is just going to add more complexity.”

First, know your business For Kirsty Rockall, International Tax and Transfer Pricing Partner at KPMG, the entire board needs to have a clear

Kirsty Rockall Partner, International Tax and Transfer Pricing, KPMG in the UK

vision on the implications of this evolving tax system and its impact on the company.

Leaders of every department need to know where value is driven in its business processes so they can make more informed decisions, both for today and the future, because every decision on business operations has a tax risk attached to it.

As Rockall explains, when companies do get a better hook on how they operate and how this impacts tax, they will also find that digital technology is not only affecting their tax liabilities but also their fiscal reporting.

“We’re starting off this technological journey with robotic process automation (RPA) which makes filing and handling returns a lot more streamlined,” she says.

“It takes the human element out of highly repeatable, high-volume work, but it can also be used to recognise

Robotic process automation (RPA) makes filing and handling returns a lot more streamlined.

anomalies. It can compare companies, and individuals, to their peers and thus know which returns should be challenged, and who are persons of interest.

This technology could also see the tax function move more towards real-time reporting.”

A role for blockchain?

This is a major step towards a fairer tax system. It could become even more pronounced if authorities were ever to insist on blockchain technology being deployed. This is effectively a shared ledger where all parties have sight on income and outgoings and all entries are attributable to the person who made them.

“A distributed ledger would update transactions instantaneously, a little like multiple people working on a shared spreadsheet,” she says.

“Blockchain is already being used on a small scale by tax authorities in a number of countries. With blockchain, there is a single source of truth, which provides you with ultimate transparency and the ability to reduce the number of systems, process steps and data interfaces used by companies.

If fiscal authorities are provided with access to companies’ blockchains in order to fulfil

compliance requirements, then both parties will have access to the data, immediately and in real-time.”

Ultimately, then, the digital economy is fast becoming the economy in general, as companies increasingly use technology to conduct everyday business. While this adds complexity in determining where value is created, and therefore, where it should be taxed, it also has benefits.

Governments can expect to receive tax with less effort and with better protection against fraud while businesses can streamline their processes and get a better understanding of their financial position at any one time.

Making Tax Digital is still being developed by HMRC but is expected to happen over the next few years. Companies need to continue refining their preparations not just for how digital technology impacts their tax position, but also how they report on it.

Sean Hargrave

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A successful career in tax?

Michael Steed Co-chairman, the ATT Technical Steering Group

Tax professionals come from the ranks of the accountancy profession and less so from the legal world.

The tax profession attracts and needs the best. It is a highly-skilled environment in which professionals can develop and thrive.

Traditionally, tax professionals come from the ranks of the accountancy profession and less so from the legal world. That demand is reflected by accountancy firms employing many more tax professionals than legal firms.

Another tradition is that tax professionals train postdegree, either as accountants or lawyers and then specialise in tax. However, tax degrees are now becoming more common, so it is no longer totally a graduate profession.

Huge opportunities exist for school leavers, through apprenticeships and direct entry into accountancy firms, to train for valuable tax qualifications such as the Association of Taxation Technicians (ATT).

Key skills include good academic qualifications as an indicator of exam success and the ability to think through an issue.

Tax professionals need good peripheral vision, with the ability to think laterally across a problem. I am often asked about tax problems and rarely do the answers involve just one tax – good tax professionals are able to look across the piste and recognise other tax touch points that will be in play.

For example, the recent Coca Cola tax case (2017) was about the benefit-in-kind treatment of the provision of multipurpose vehicles for employees – were they cars or vans? But the question has resonance in other areas; will the VAT on the purchase be recoverable and will the vehicle qualify for a 100% tax deduction in the Capital Allowances arena?

Tax, like accountancy increasingly has strong digital strands of DNA. Making Tax Digital (MTD) is the latest entrant into the digital arena, but this follows the digitalisation of tax returns for individuals and companies and the introduction of a real-time reporting system (RTI) for PAYE and NICS for employees.

Making Tax Digital comes on-stream for VAT in April 2019. This will mean quarterly online digital submissions using dedicated software. Other taxes will follow, probably from 2020 onwards.

Skills such as teamwork are necessary, as is the ability to ask searching questions and listen to answers, to understand the client’s perspective.

Specialised tax skills are always in demand and Brexit, for example, will see a steep rise in the need for indirect tax specialists to deal with areas such as customs duties.

So if you are considering a career in tax, come on in – the water’s lovely!

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The biggest tax impact of deciding to leave the EU is, without doubt, the need to create a national customs duty system Tax and the European Union each inspire farfetched comment, and that is certainly the case when you put the two together.

One regularly hears from Brexiteers that, free of the shackles of Brussels, all kinds of tax reform and liberalisation are possible – and equally, from Remainers, that such changes are needed in a desperate attempt to make good the economic losses of leaving.

Let’s get real. Britons may be free but they will always need to pay taxes. Aggressive tax competition was always possible – perhaps easier – for countries within the EU (look at Luxembourg) – but in or out, global public opinion is mobilising against it, and its days may be numbered.

A read of the Office of Tax Simplification’s recent report on VAT (‘Value Added Tax: routes to simplification) demonstrates that even with this emblematically European tax, most of the complexities and distortions that burden business and complicate life are entirely home-grown, and always within our power either to remove or (most likely, on past form), to go on putting up with.

The biggest tax impact of deciding to leave the EU is, without doubt, the need to create a national customs duty system.

This is likely to be the case even if we end up in some form of customs union, or customs partnership (currently a matter of some political controversy!) While a customs union or partnership may allow duty-free movement between the EU and UK, it could (and probably will) still require businesses to prepare and submit import and export documents in some shape or form – though

John Cullinane Tax Policy Director, CIOT

For every 24 hours’ delay in shipping due to unready customs regimes on either side of the channel, another day’s worth of inventory needs to be funded and in motion.

not necessarily at the border. The impact of this on the 135,000 businesses who currently trade with the EU, in having to come to grips with serious customs obligations for the first time (in half a century for the oldest businesses, or ever for most of them) cannot be overstated. It is likely to drive up cost (e.g. outsourcing import or export document preparation and filing), or, for larger businesses,

potentially drive supply chain changes (whether into or out of the UK or EU) in order to meet preferential agreement conditions with third parties.

Another impact on business is that, for every 24 hours delay in shipping due to unready customs regimes on either side of the channel, another day’s worth of inventory needs to be funded and in motion. Just In Time delivery may need to become ‘Just In Time, After Allowing For Significant Border Friction’.

HMRC will need IT and other systems to deal with them.

Many ports only handle business with Europe. Laws are being drafted, and either put through Parliament, or the machinery of secondary legislation. There will need to be guidance, compliance, and enforcement. Will there be a soft enforcement regime to help business adjust to any post Brexit regime? And will there be a strong helping hand by government in helping these businesses learn or relearn how to import and export? Or will it be a Brexit version of caveat emptor where innocent errors cause shipping delay, enquiries and punishment?

So what will Brexit really mean at a wider European level? If I am to risk one firm prediction, we will be standing shoulder to shoulder with Europe – more closely than ever before on tax issues – in trying to extract more taxes from the US technology multinationals, even risking the wider multinational consensus developed over decades to do it, and even though the amounts collected will never match the expectations that the public is being encouraged to have.’

John Cullinane

After Brexit: will your company be ready for a new tax world?

UK companies stand to lose tax advantages once Britain has left the EU VAT regime.

Is it still too early in the Brexit process to properly prepare for a new tax future?

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here could be a surge in VAT compliance bills for small and medium sized enterprises post-Brexit. It is estimated that 27,040 UK small businesses selling goods online across the European Union could face an annual £772 million VAT compliance bill. On top of that, new EU VAT registration and returns obligations could cost as much as €28,568 per annum for each business.

SMEs selling to the EU may need to revise business models “UK companies selling goods to Europe enjoy a number of VAT simplifications — or advantages

— inside the EU VAT regime,” says Richard Asquith, VP Global Indirect Tax at Avalara. “For example, if sales are under the national registration thresholds set by each country, small companies and micro businesses don’t have to VAT register with all the different countries they sell to. But that will change when the UK leaves.

HMRC estimates this will impact 132,000 companies, while the EU estimates that the cost of VAT registering will be around €5,000-€6000 per annum, per country. That would have a dramatic impact and could undermine SME’s business models for selling to the EU.” Bigger UK players — such as pharmaceutical or aerospace firms — will also face challenges when selling to EU companies because they will no longer enjoy zero VAT rating on their sales to other EU states. “So, a UK company buying from a French company will have to pay French VAT on that sale of 20% for the

Richard Asquith VP Global Indirect Tax, Avalara

HMRC estimates Brexit will impact 132,000 companies.

first time,” says Asquith. “This money can be reclaimed but, inevitably, that’s a bureaucratic process — and a big drain on cash flow. Although businesses should stand to get the full amount back, there is always leakage in the system, and companies can expect to lose around 5-10% of this VAT cost.”

Preparations for leaving the EU VAT regime The UK leaves the EU on 29 March 2019, with political agreement on a transition period lasting until 31 December 2020. “During this time, the UK will stay inside the single market, customs union and EU VAT regime,” says Asquith.

“What is unclear is what happens beyond that. My own belief is that what has been called a ‘transition period’ will actually be a ‘standstill period’ while the UK negotiates its position. I think it will soon become obvious that the UK

will need a genuine transition period from 1 January 2021 — which could last for two years or even more.”

The agreed transition period to December 2020 has given UK companies the breathing space to relax a little. But the fact is that it’s difficult for businesses to prepare for a post-Brexit tax landscape when it’s unclear what that landscape will look like.

“The best thing for UK companies to do is to make sure they have mapped out where there is European VAT in their supply chains or e-commerce models, and then think about what their VAT liabilities would be if simplifications were lost,” says Asquith. “I’m afraid that until the clouds clear about the terms of our departure, there’s really very little else they can do.”

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Small firms are losing out to a complex HMRC regime

Mike Cherry National Chairman, FSB

Tax compliance costs the average UK small firm thousands of pounds every year. Now, a division of the Treasury itself is calling for change. So why is paying tax so costly and what can be done to streamline the process?

Reframing the tax debate UK small business owners lose, on average, £5,000 and three working weeks to the tax compliance process every year. An HMRC regime that’s time-consuming and expensive to navigate can make life very uncomfortable indeed. The old adage that ‘there are two certainties in life: death and taxes’, certainly resonates.

More than four in ten of our members here at FSB find tax rates confusing. A similar proportion say exemptions are difficult to understand.

To save themselves the hassle of meeting HMRC’s demands, more than three quarters end up shelling out for expert help.

Another old reference point that often surfaces in discussions about this issue is the fact that the UK tax code is longer than the King James Bible.

Striking though it is, this comparison hints at the big historical barrier to improving the entrepreneur user experience of HMRC. Namely that discussions about tax simplification are dominated by calls to simplify the tax code itself, rather making the process of paying tax more straightforward.

If a tax is conceptually simple it doesn’t necessarily mean it’s easy to pay. Take VAT, for example. The majority of small firms say the tax is easy to understand. But, because of the admin that goes with charging it, collecting it and navigating its myriad exemptions, it’s actually the most time-consuming to pay. VAT, on average, costs small firms 44 hours a year.

Hope is on the horizon though. Done right, the roll-out of Making Tax Digital (MTD) could make the tax compliance process considerably easier for small firms. Greater digitalisation takes us a step closer to automation of tax collection.

Caveats are needed at this juncture though. The government has been right to make MTD voluntary for the smallest firms. It should continue to do so to allow success stories to emerge and thorough user-testing to be conducted. Equally, the transition to MTD needs to be affordable. It’s no use swapping one set of huge tax-related costs for another.

Increasing the reach of reliefs “A complex patchwork”. That’s how the Treasury’s Office of Tax Simplification (OTS) describes the various tax reliefs that are on offer to small firms. No doubt business owners who’ve been frustrated by the process of applying for reliefs might reach for a less delicate analogy.

The main problem we’ve found with tax reliefs is not so much that they’re ineffective – thousands of small firms have hugely benefitted from business rates relief, R&D tax credits and the Employment Allowance – it’s more that awareness levels aren’t where they should be.

Two thirds haven’t heard of the Enterprise Investment Scheme (EIS), for example. Equally, small firms tend to think about reliefs when they take stock at the end of the tax year rather than when they’re planning for the future. That needs to change.

The OTS agrees with our recommendation that more should be done to raise awareness of the reliefs that are out there and backs our calls to simplify compliance.

So let’s ring the death knell for conversations about how much longer the tax code is than the King James Bible. Our focus must turn to the small business user experience of HMRC and ensuring entrepreneurs can access the reliefs they need to thrive.

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Tackling tax crimes calls for a multipronged approach The Panama Papers and other recent leaks again have highlighted the need to strengthen global efforts against tax evasion and fraud.

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ax crimes not only deprive governments of revenues, they also undermine trust in the fairness of the tax system. Yet, fighting these crimes has become harder as they become more sophisticated and cross-border.

Since April 2009, when Gordon Brown declared the era of bank secrecy over at the G20 Finance Ministers’ meeting in London, the OECD, G20 and international community have stepped up efforts to enhance transparency and exchange of information for tax purposes so that there is nowhere left for tax cheats to hide.

Today, 150 jurisdictions are members of the Global Forum on Transparency and Exchange of Information for Tax Purposes, where a rigourous peer review is carried out of all members (and beyond) of implementation of the international tax transparency standards. 117 countries and jurisdictions have joined the multilateral Convention on Mutual Administrative Assistance in Tax Matters. In September 2017, the first automatic exchanges of financial account information began with almost 50 jurisdictions, and another 50 on track to start such exchanges next year.

And these efforts are working.

Already, in anticipation of the beginning of such exchanges,

Grace Perez-Navarro Deputy Director, OECD Centre for Tax Policy and Administration

governments have identified almost US $85 billion in additional taxes through voluntary disclosure and similar programmes.

A new round of peer reviews is underway with a focus on availability of beneficial ownership information. Technical assistance is being provided around the world to support jurisdictions’ efforts in implementing the international tax transparency standards.

Transparency alone will not win the fight against tax crimes These global efforts – in which the OECD has played a leading role – have been critical to enhancing the ability of governments around the world to deter, detect and prosecute tax evasion and tax fraud. But more is needed to fight tax crimes effectively.

The OECD has identified 10 key principles to guide countries, in particular developing countries, to strengthen their capacity to tackle these crimes.

First among them is to make tax offenses a crime.

Countries may differ in where they draw the line between non-compliant and criminal behaviours but it is important to draw that line so that criminal sanctions may be applied. The threat of such sanctions acts as a deterrent; it also reinforces the integrity, neutrality and fairness of the tax system. Criminalising certain non-compliant behaviours also ensures the availability of the criminal investigative and enforcement powers needed to uncover the facts.

Governments also need to take a strategic approach to these crimes. This includes establishing an appropriate structure for the investigations and devoting the necessary resources to such efforts. The tremendous strides we have made in enhancing transparency and exchange of information will mean little if the criminal investigation functions are not given the resources to exploit these new sources of information to the fullest.

The relevant authorities also need adequate investigative

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“Governments need to take a strategic approach to these crimes, establishing an appropriate structure for the investigations and devoting the necessary resources to such efforts.”

Grace Perez-Navarro

powers to follow the money trail that the criminal has sought to hide. In today’s digital age, the power to search and seize computers, phones, software and digital media is increasingly important.

Authorities also need the power to freeze, seize and confiscate assets – in particular, financial assets, which can easily be moved from one jurisdiction to another.

Tax crimes should be made a predicate offense to money laundering in accordance with the Recommendations of the Financial Action Task Force.

Doing so sends the signal that tax crimes are serious crimes; that the era of tax evasion as a gentleman’s game is over.

It also means that the penalties are likely to be more severe where a person has

committed money laundering and a tax crime. In addition, because financial institutions and other professionals and reporting entities are required to file Suspicious Transaction Reports on money laundering and predicate offenses, there is likely to be greater intelligence on possible tax crimes.

Effective inter-agency cooperation at the national level is essential The fight against tax crimes

and other financial crimes can be enhanced by taking a whole government approach and harnessing the expertise and intelligence of other relevant law enforcement agencies. Depending upon the circumstances, this can involve a number of government agencies, including the tax administration, the customs administration, financial regulators, anti-money laundering authorities including Financial Intelligence Units, the police

Enhancing the ability of governments around the world to deter, detect and prosecute tax evasion and tax fraud.

and specialised law enforcement agencies, anti-corruption authorities and the public prosecutor’s office. The impact of such collaboration is evident from the FIFA corruption scandal, which started as a tax case uncovered by an IRS agent and was ultimately pursued by the FBI and other law enforcement agencies around the world.

Protection of the suspect’s rights is paramount Last but not least, the suspect’s rights must be respected. Tax crimes are no different from other crimes when it comes to the basic rights and protections afforded the accused. These rights include the right to remain silent, to a presumption

of innocence; to be advised of their rights; to be advised of the particulars of which they are accused; to access and consult a lawyer and entitlement to free legal advice; to interpretation and translation; to access documents and case material; to a speedy trial and to protection from double jeopardy.

There is no single silver bullet to tackling tax crimes but with these global principles governments can greatly improve their chances.

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