A7.440 Tax investigations and money laundering
The Proceeds of Crime Act 2002 (POCA 2002) made the question of money laundering directly relevant to tax investigations, as well as placing wider obligations on professional advisers. For a full discussion on POCA 2002 and the money laundering obligations, see A7.101. This article provides guidance on the POCA 2002 rules in relation to investigation cases.
Previous money laundering legislation related principally to the laundering of drug or terrorist funds. POCA 2002 concerns the proceeds of all crime, including all acts of tax evasion and fraud. The practical effect of this in the context of taxation is that where, in the course of their business, persons in the regulated sector (see below) know or suspect that their clients or others have committed a money laundering offence, including tax evasion, they are required to report their suspicions to the National Crime Agency (NCA) (formerly the Serious Organised Crime Agency, SOCA). As there is no de minimis limit, the obligation is to report all suspicions irrespective of the amounts involved.
Tax evasion offences do not fall within any special category, and the proceeds (or monetary advantage) arising from tax offences are treated no differently from the proceeds of other criminal conduct1. Tax evasion includes both the under declaration of income and the overstatement of expenses. Direct tax offences usually involve some criminal intent or dishonesty; accidental error is not a crime.