What started off in 2019 as an HMRC investigation into the activities of Entain Plc’s (Entain) former Turkish-facing online betting and gaming business has now concluded in a major deferred prosecution agreement (DPA) entered into with the Crown Prosecution Service (CPS) for the blockbuster sum of £615m. This is the second largest DPA recorded in the UK and is the first DPA entered into by the CPS, following an HMRC investigation.
On 5 December 2023, Dame Victoria Sharp approved the DPA between the CPS (the prosecutor) and Entain, following a multi-year investigation by HMRC into the operations of Entain’s legacy Turkish subsidiary. Under the DPA, Entain has agreed to pay:
- a penalty of £465m;
- a disgorgement of profits totalling £120m;
- a £20m charitable donation; and
- £10m in respect of the costs of HMRC and CPS.
In her written summary of the judgment, Dame Victoria Sharp stated that Entain’s cooperation with the CPS and HMRC during the course of the investigation had been “exemplary”. When considering whether it would be in the interests of justice to approve the DPA, Dame Victoria Sharp considered this significant level of cooperation alongside Entain’s complete overhaul of their compliance procedures to conclude that approving the DPA would be preferable to prosecuting Entain. It is interesting to note that despite not self-reporting the relevant conduct, Entain’s cooperation was adjudged to be sufficient to militate in favour of a DPA, rather than prosecution.
In May 2023, Entain announced that it anticipated receiving a “substantial” financial penalty following HMRC’s investigation. In August 2023, midway through negotiations with the CPS, it announced to the market that it had made a provision of £585m in its accounts to cover any fine or penalty. It is now clear that negotiations must have been sufficiently well-advanced at that time, such that Entain had a clear idea of the amount it would need to pay; £585m being the amount of the financial penalty and disgorgement of profits sanctioned by the Court.
This will be the thirteenth DPA secured in the UK. The first twelve of these were entered into by the Serious Fraud Office (SFO). This is the first entered into by the CPS in respect of an HMRC investigation and, perhaps surprisingly, relates to conduct in breach of section 7 of the Bribery Act 2010, normally seen as the reserve of the SFO. HMRC’s investigation and the CPS prosecution demonstrate that where the case is right, they can, and will, prosecute such conduct. Businesses should be aware that the SFO is not the only investigative or prosecuting agency they should take note of.
As explained in our earlier article, HMRC have faced criticism from the Public Accounts Committee for the relatively small numbers of prosecutions resulting from its criminal investigations. The concern is that low prosecution figures will impact its ability to demonstrate a credible deterrent effect. Compounding the criticism is the fact that there have been no prosecutions pursuant to the corporate offence of failing to prevent the facilitation of tax evasion, despite this legislation being designed specifically for HMRC. The announcement of this DPA will go some way to countering this narrative, showing that HMRC are able to investigate high-value and high-profile cases successfully.