BIM43150 - Specific deductions: crime (expenditure involving): criminal payments: jurisdiction and nationality

Jurisdiction is not tied to nationality and, except where Crown servants are involved, the UK courts do not have jurisdiction over corruption offences that take place entirely abroad even if all those involved are British nationals. Therefore until the introduction of ICTA88/S577A (1)(b) such payments could not be disallowed. However if the offer, acceptance, or agreement to accept, takes place in the UK, then the UK will have jurisdiction over the offence, and the payment in question will be a disallowable criminal payment within the terms of Section 577A.

Section 577A (1)(b)

Section 577A (1)(b) applies, for example, where a non-UK national in an overseas branch of a UK company pays a bribe and does not report that bribe to the UK head office. Without (1)(b) there is no offence. This is because there is neither a ’knowing mind’ in the UK, nor any UK national who is directly involved in the payment. Subsection (1)(b) brings in the payment because “a corresponding payment in any part of the UK” would be a criminal offence.

Crown servants

Indictable offences committed by British Crown servants abroad, acting, or purporting to act, in their official capacity, are subject to UK jurisdiction by virtue of Section 31 of the Criminal Justice Act 1948. Corruption offences are indictable and so they are subject to this rule. The other party to the corruption would not be guilty of any offence under UK law unless they are also a Crown servant.