Corporate criminal liability for failure to prevent tax evasion

The Criminal Finances Act 2017 introduces two new corporate criminal offences of failure to prevent the facilitation of tax evasion. The two new offences, one for failure to prevent UK tax evasion and the second for failure to prevent facilitation of foreign tax evasion, came into force on 30 September 2017.

These offences will particularly affect organisations in the financial, legal and accounting services. However, businesses in other sectors may fall within its scope.

For an offence to have been committed, there must be criminal tax evasion by a tax payer and there must be criminal facilitation of this offence by a person acting on behalf of a relevant body (corporate entity or partnership). The only available defence is that the relevant body can show it had reasonable procedures in place that were designed to prevent persons associated with it from facilitating tax evasion, or that it was not reasonable in all the circumstances to expect the relevant body to have such procedures in place

It is therefore recommended that corporate bodies (particularly those in the financial, legal or accounting services) take steps to ensure that they have in place effective anti-tax evasions systems and policies. HMRC has issued guidance to those affected which can be viewed at https://www.gov.uk/government/news/stop-facilitating-tax-evasion-or-face-criminal-prosecution-hmrc-tells-corporations

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Nicola Broadhurst

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