Bribery Act & Proceeds of Crime - Written by on Thursday, September 8, 2011 2:28 - 0 Comments

Todays lesson Ecclesiastes 1:9-14 NIV: There is nothing new under the sun, or, bribery and taxes

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The Financial Times reported earlier this week. that Richard Alderman, the Director of the SFO, seeks to comb through corporate tax returns in the context of Bribery Act enforcement.

A commentator suggested that this was unlikely to reveal the payment of a bribe.  However, this somewhat missed the point since in the same article Mr. Alderman explained if a tax deduction was sought in the context of a bribe paid by way of an expense which had not been identified as such would create another ‘books and records’ offence and a line of attack for the UK Inland Revenue (HMRC).

It is unsurprising that Mr. Alderman should think in these terms given his background.  He was formerly the Director of National Teams and Special Civil Investigations in HM Revenue and Customs where he was responsible for carrying out specialised tax investigations.

Speaking at the 29th International Symposium on Economic Crime at Jesus College, Cambridge University Mr. Alderman explained that the SFO was looking to fresh approaches to investigation, highlighting one of these approaches he highlighted the tax example:

“What we also have to do is to keep on looking for fresh approaches to investigation. Let me give you one example based upon recent experience. Some 20 years ago companies were able to get deductions for tax purposes in respect of bribes. Happily that is no longer the position. What this means is that companies ought to ensure that in claiming tax deductions, they take out any amounts that have been paid by way of bribes. If they fail to do this then they are claiming a deduction in respect of something that is specifically prohibited by Parliament as a deduction.

What we have started to do, therefore, is this. Companies ought to have the information that they need in order to ensure that they are not claiming deductions in respect of bribes. We have, therefore, started to require companies to disclose to us relevant parts of their tax calculations. We want to see how these have been drawn up and we want to see what evidence there is of the identification of bribes. We are going to be doing this in other cases as well. Companies therefore need to appreciate that we are going to be asking for the relevant parts of their tax calculations. It is going to be interesting to see how this develops.”

It all sounds a little reminiscent of the downfall of Al Capone.

Image © Crown Copyright 2011

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