High Court Sets Out New Sentencing Framework For Tax Evasion Offences

• Published date: 25 August 2021
• Subject Matter: Tax, Income Tax
• Law Firm: Rajah & Tann
• Author: Mr Vikna Rajah and Hui Min Foo

For justice to be achieved, like cases should be treated alike. When a court is faced with two very similar cases, it should arrive at broadly similar outcomes. Consistency in sentencing - encompassing both the adoption of a consistent methodology as well as the achievement of consistent sentencing outcomes - is therefore crucial to ensuring a fair justice system.

In Tan Song Cheng v Public Prosecutor and another appeal [2021] SGHC 138, the High Court agreed with the prosecution that previous sentencing decisions under section 96(1) of the Income Tax Act lacked a consistent or coherent sentencing approach. As such, the High Court substantially endorsed the five-step framework proposed by the prosecution, transposed from the five-step framework in Logachev Vladislav v Public Prosecutor [2018] 4 SLR 609:

1. Identify the level of harm and the level of culpability;
2. Identify the applicable indicative sentencing range;
3. Identify the appropriate starting point within the indicative sentencing range;
4. Make adjustments to the starting point to take into account offender-specific factors; and
5. Make further adjustments to take into account the totality principle.

In this Update, we elaborate on the framework and examine the factors to be considered.

Factual Background

Section 96(1) of the Income Tax Act ("s 96(1)") sets out the penalties for tax evasion, being triple the quantum undercharged and/or obtained, with a fine not exceeding $10,000 and/or imprisonment not exceeding three years.

Briefly, the Appellants had pleaded guilty in separate and unrelated proceedings before the same District Judge to charges under s 96(1). At first instance, the District Judge accepted and applied the sentencing framework proposed by the prosecution for s 96(1) offences. Both Appellants filed appeals against their sentences, seeking changes to the sentencing framework, and the appeals were heard together by the High Court as the issues at hand were substantially the same.

Sentencing Framework

The High Court substantially upheld the five-step framework accepted by the District Judge as set out above, and we delve into each step below.

Tax

(A) Identify the level of harm and the level of culpability

The level of harm and level of culpability should be assessed with reference to offence-specific factors as follows:

The Court rejected alternative approaches proposed by the Appellants, such as replacing the amount of income tax evaded (as the primary indicium of harm) with either the...