Criminal and civil law

Law CBE

Criminal vs civil offences

Criminal law addresses actions that are offences against the Crown or public authorities, harmful to society and prosecuted by the state. Common types include theft, assault, fraud, drug offences and money laundering. Conviction requires proof 'beyond reasonable doubt,' reflecting the severe consequences such as imprisonment or fines.

Conversely, civil law deals with disputes between individuals or organisations, typically involving private rights and remedies. Common types include breach of contract, property disputes, negligence, defamation, and family law issues. In civil cases, the burden of proof is 'on the balance of probabilities,' meaning the claimant must show it is more likely than not that the defendant is liable. Remedies often include damages or specific performance.

Some offences can fall under both criminal and civil law. For example, assault can be prosecuted as a crime, resulting in criminal penalties, and also pursued as a civil offence, where the victim may seek compensation for injuries.

Tax-related criminal offences

Primary offences associated with tax law violations, include general tax offences, theft, fraud, money laundering, and bribery.

General tax offences include failing to pay taxes, filing false tax returns, or evading tax payments.

Key regulations governing tax-related criminal offences

The Proceeds of Crime Act 2002 (POCA) targets money laundering and the recovery of criminal assets. It empowers authorities to confiscate illicit gains and mandates reporting suspicious activities. Strengthened by the 2017 regulations, POCA is essential for preventing financial crime in the UK.

The Bribery Act 2010 criminalises bribery in both public and private sectors and introduces a corporate offence for failing to prevent bribery. It applies globally to UK entities, emphasising the need for robust anti-bribery policies to avoid severe penalties.

The Financial Services and Markets Act 2000 (FSMA) regulates the UK financial industry, establishing the FCA and PRA. It covers market abuse, insider dealing, and enforcement powers, ensuring financial institutions adhere to regulatory standards.

The Criminal Finances Act 2017 enhances measures against money laundering, tax evasion, and corruption. Key provisions include Unexplained Wealth Orders and corporate offences for failing to prevent tax evasion. It strengthens information-sharing to combat financial crimes effectively.

Key provisions under the Data Protection Act 2018 and GDPR

Key rights under data protection laws:

Data protection laws grant individuals, known as data subjects, several important rights. These rights include:

• Right to be informed: Individuals have the right to be informed about the collection and use of their personal data.

• Right of access: Individuals have the right to access their personal data and supplementary information.

• Right to rectification: Individuals have the right to have inaccurate personal data rectified, or completed if it is incomplete.

• Right to erasure (Right to be forgotten): Individuals have the right to have personal data erased.

• Right to restrict processing: Individuals have the right to request the restriction or suppression of their personal data.

• Right to data portability: Individuals have the right to obtain and reuse their personal data for their own purposes across different services.

• Right to object: Individuals have the right to object to the processing of their personal data in certain circumstances.

• Rights in relation to automated decision making and profiling: Individuals have the right not to be subject to a decision based solely on automated processing, including profiling, which produces legal effects or similarly significantly affects them.

Excercising the right to erasure:

In certain situations, data subjects have the right to request the deletion of their personal data. This is often termed the ‘Right to be forgotten.’ Circumstances where this right can be exercised include:

• Data no longer necessary: If the data is no longer needed for the purpose it was collected, individuals can request its deletion.

• Withdrawal of consent: If processing was based on consent and the individual withdraws that consent, they can request their data be deleted.

• Unlawful processing: If the data has been processed unlawfully, individuals have the right to have it erased.

Organisations must comply with these requests unless specific legal obligations or legitimate interests override the request.

Taking action and enforcement:

These provisions ensure that individuals have control over their personal information and can take action if their data is mishandled.

In the UK, the Information Commissioner’s Office (ICO) is responsible for enforcing data protection laws. If individuals believe their data rights have been violated, they can:

• File a complaint with the ICO: The ICO can investigate and take action against organisations that fail to comply with data protection laws.

• Seek legal action: In some cases, individuals can pursue legal action for compensation if they have suffered harm due to a data protection breach.

Responsibilities of tax advisors related to data protection

Obtaining explicit consent:

Tax advisors must obtain explicit consent from their clients before collecting and processing any personal data. This involves clearly informing clients about what data will be collected, the purpose of the data collection, and how the data will be used. For example, before collecting financial information for tax purposes, tax advisors should ensure clients sign a consent form that details these aspects.

Registering with the ICO

Tax advisors are required to register with the Information Commissioner's Office (ICO) as data controllers. This registration reflects their commitment to adhering to data protection laws and ensures they are recognised by the regulatory body responsible for overseeing these laws in the UK.

Reporting data breaches

In the event of a data breach, tax advisors must report it to the ICO within 72 hours. For instance, if an unauthorised person accesses client data, the tax advisor must promptly assess the situation, notify the ICO, and provide details about the breach, including the type of data involved and the steps taken to mitigate the damage. Prompt reporting is essential for minimising harm and demonstrating accountability.

Principles of contract law

Contracts should align with the Supply of Goods and Services Act 1982 and the Consumer Rights Act 2015.

Supply of Goods and Services Act 1982

The Supply of Goods and Services Act 1982 is a key piece of legislation in the UK that sets out the obligations of businesses providing goods and services. It applies to contracts where goods are supplied as part of a service.

Key provisions include:

• Reasonable care and skill: Service providers must perform their services with reasonable care and skill.

• Time for performance: If the contract does not specify a time, the service must be carried out within a reasonable time.

• Consideration: The price for the service must be reasonable if not agreed upon in advance.

The act ensures that consumers receive a standard level of service and protection, promoting fairness in commercial transactions.

Consumer Rights Act 2015

The Consumer Rights Act 2015 consolidates and updates consumer protection laws in the UK. It covers contracts for goods, digital content and services, providing consumers with clearer rights and remedies.

Key provisions include:

• Goods: Must be of satisfactory quality, fit for purpose, and as described.

• Digital content: Must meet the same standards as goods and be free from faults.

• Services: Must be performed with reasonable care and skill, similar to the requirements under the Supply of Goods and Services Act 1982.

The act provides comprehensive protection for consumers, ensuring they have clear rights and remedies if goods, digital content, or services do not meet the required standards.

Contract law principles in tax advisory services

In tax advisory services, contract law principles play a crucial role in defining the relationship between the firm and the client.

When a tax advisory firm enters into a contract with a client to provide tax planning services, the contract typically includes stipulations that the services will be performed in accordance with the Supply of Goods and Services Act 1982. This act ensures that the firm carries out its work with reasonable care and skill.

Furthermore, the Consumer Rights Act 2015 mandates that any advice or materials provided to the client must meet satisfactory quality standards. Adherence to these legal principles helps the firm avoid potential legal disputes and maintain client trust.

Tort of negligence

Negligence involves a duty of care, and breaches leading to client loss can result in legal action. Tax advisors must exercise a reasonable standard of care to avoid causing harm to their clients through their advice or actions.

Example - failure to inform of a tax relief, causing client financial loss.

Legal concepts:

• Vicarious liability - employer can be held responsible for the actions of their employees, provided those actions occur within the course of employment. E.g.client can seek compensation from the firm if a tax advisor gave incorrect advice.

• Duty of mitigation - requires clients to take reasonable steps to minimise their losses after suffering harm due to a breach of contract or negligence. E.g. if client faces financial loss due to incorrect tax advice, they are expected to mitigate their losses by seeking alternative tax advice to rectify the error. Failure to do so might reduce the amount of compensation they can claim.

• Remoteness of damage - the idea that only damages which are a foreseeable consequence of the breach or negligence can be claimed. E.g. incorrect tax advice directly leads to a financial penalty from HMRC, that penalty would be considered foreseeable damage. But unrelated financial issues that arise independently of the advice would not be covered.