In response to the OECD’s call to action for countries to do more to tackle the enablers of tax crime, the ‘heads of’ tax enforcement administrations from the UK, the US, Australia, the Netherlands and Canada (collectively known as the J5) came together in June 2018 to create an innovative new operational alliance. This alliance has already proactively shared more information than had been disclosed by the same parties over the previous decade.
The declared mission of these joint chiefs of global tax enforcement – from HMRC, Australia’s Taxation Office and Criminal Intelligence Commission, the US’s Internal Revenue Service Criminal Investigation Directorate, Canada’s Revenue Agency and the Netherland’s Tax Information and Investigation Service (the FIOD) – is to combat transnational tax crime through increased enforcement collaborations. The J5 considers that corporate and individual enablers of tax crime and money laundering, and certain offshore structures, pose a threat to the economic and fiscal interests of their countries. As such they’ve set out to actively develop shared strategies and common data sharing platforms specifically to drive coordinated simultaneous investigations to combat, disrupt and prevent serious non-compliance.
What makes the J5 a game changer is its clear focus on driving visible operational outcomes. J5 partners have already commenced simultaneous operations to target over a dozen high-end enablers of tax evasion (who likely believed themselves to be beyond the reach of traditional domestic law enforcement), cooperated across more than 50 other cases covering criminality ranging from money laundering to personal tax evasions, and have an advanced programme of work in place with international experts in data analysis and data sciences, looking to identify further high risk enablers of tax crime.
From a UK perspective, it is interesting to note that this development follows the government’s own decision, articulated as part of Budget 2017, to invest in HMRC to allow the UK’s tax administration to recruit 500 compliance staff specifically to address the exchequer risk posed by those who enable tax fraud. HMRC is committed to recover £2.3bn in tax through enabler-related investigations by 2022/23.
HMRC, more specifically its ‘offshore corporate and wealthy’ compliance unit (OCW) sits at the heart of the UK’s operational contribution to J5 activity. Established in 2016 as part of HMRC’s response to the Panama Papers, OCW’s 500 investigative staff are growing in confidence and capability. They already undertake over 800 civil and criminal interventions each year, have seen their revenue impacts grow from £325m to £560m per annum but, perhaps most significantly as an indicator of their ambition, have driven an eight-fold increase in the number of serious and complex cases under criminal investigation, including investigations into corporations.
In what’s considered to be a strategically significant development, OCW recently commenced the delivery of training on the corporate criminal offence and the Bribery Act, key components of the UK’s extra-territorial legislative criminal arsenal, to J5 investigators who are now equipped with an awareness of key behaviours and indicators designed to allow them to recognise, and refer, potential transgressions they encounter as part of their own ongoing domestic triages.
International investigations are complex, but coordinated operational outcomes are already foreseen during the first half of 2020. It will be informative to see which enabler segments are addressed in the first instance, and how J5 partners collaborate at an operational level to put the picture of suspected global criminality before their respective domestic prosecutors.
2020 will determine whether the J5’s high level ambition to ‘dream without borders’ is on the right track. As an avid follower of this project, I wouldn’t bet against it.
Andrew Sackey, Pinsent Masons (andrew.sackey@pinsentmasons.com)
Home >Articles > The J5: tax enforcement without borders
The J5: tax enforcement without borders
Something of a game changer?
In response to the OECD’s call to action for countries to do more to tackle the enablers of tax crime, the ‘heads of’ tax enforcement administrations from the UK, the US, Australia, the Netherlands and Canada (collectively known as the J5) came together in June 2018 to create an innovative new operational alliance. This alliance has already proactively shared more information than had been disclosed by the same parties over the previous decade.
The declared mission of these joint chiefs of global tax enforcement – from HMRC, Australia’s Taxation Office and Criminal Intelligence Commission, the US’s Internal Revenue Service Criminal Investigation Directorate, Canada’s Revenue Agency and the Netherland’s Tax Information and Investigation Service (the FIOD) – is to combat transnational tax crime through increased enforcement collaborations. The J5 considers that corporate and individual enablers of tax crime and money laundering, and certain offshore structures, pose a threat to the economic and fiscal interests of their countries. As such they’ve set out to actively develop shared strategies and common data sharing platforms specifically to drive coordinated simultaneous investigations to combat, disrupt and prevent serious non-compliance.
What makes the J5 a game changer is its clear focus on driving visible operational outcomes. J5 partners have already commenced simultaneous operations to target over a dozen high-end enablers of tax evasion (who likely believed themselves to be beyond the reach of traditional domestic law enforcement), cooperated across more than 50 other cases covering criminality ranging from money laundering to personal tax evasions, and have an advanced programme of work in place with international experts in data analysis and data sciences, looking to identify further high risk enablers of tax crime.
From a UK perspective, it is interesting to note that this development follows the government’s own decision, articulated as part of Budget 2017, to invest in HMRC to allow the UK’s tax administration to recruit 500 compliance staff specifically to address the exchequer risk posed by those who enable tax fraud. HMRC is committed to recover £2.3bn in tax through enabler-related investigations by 2022/23.
HMRC, more specifically its ‘offshore corporate and wealthy’ compliance unit (OCW) sits at the heart of the UK’s operational contribution to J5 activity. Established in 2016 as part of HMRC’s response to the Panama Papers, OCW’s 500 investigative staff are growing in confidence and capability. They already undertake over 800 civil and criminal interventions each year, have seen their revenue impacts grow from £325m to £560m per annum but, perhaps most significantly as an indicator of their ambition, have driven an eight-fold increase in the number of serious and complex cases under criminal investigation, including investigations into corporations.
In what’s considered to be a strategically significant development, OCW recently commenced the delivery of training on the corporate criminal offence and the Bribery Act, key components of the UK’s extra-territorial legislative criminal arsenal, to J5 investigators who are now equipped with an awareness of key behaviours and indicators designed to allow them to recognise, and refer, potential transgressions they encounter as part of their own ongoing domestic triages.
International investigations are complex, but coordinated operational outcomes are already foreseen during the first half of 2020. It will be informative to see which enabler segments are addressed in the first instance, and how J5 partners collaborate at an operational level to put the picture of suspected global criminality before their respective domestic prosecutors.
2020 will determine whether the J5’s high level ambition to ‘dream without borders’ is on the right track. As an avid follower of this project, I wouldn’t bet against it.
Andrew Sackey, Pinsent Masons (andrew.sackey@pinsentmasons.com)
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