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There has been an update to the Criminal Finance Act 2017, which imposes new duties on agents moving forward. The legislation makes companies and partnerships (relevant bodies) criminally culpable for the failure to prevent the facilitation of tax evasion committed by an employee or associated partner.

The Act has created two new corporate criminal offences which can be committed by companies and partnerships, as opposed to men and women.

  • Failure by the corporate body to prevent the facilitation of UK tax evasion by an associated person / body.
  • Failure by the corporate body to prevent the facilitation of non-UK tax evasion by an associated person.

If found liable for either offence, a company could face unlimited fines and potentially further actions from within the industry, such as a license being revoked.

The Act requires businesses to have “reasonable prevention procedures” in place to thwart tax evasion within a firm or any associated bodies. HMRC have provided guidance on what would be considered “reasonable prevention procedures” and to provide a legal defence when under investigation. A defence would also be available in a situation where it would have been unreasonable or disproportionate to have any further procedures in place.

HMRC outline the following six guidance principles to ensure reasonable prevention procedures are in place:

  1. Risk assessments carried out by the business / relevant body to ensure exposure to the risk of tax evasion being facilitated is kept low.
  2. The procedures in place should be proportionate to the actual risk found by the assessment.
  3. Commitment to the procedures in place to prevent an offence from occurring should start with top level management creating a culture where facilitating tax evasion is not acceptable.
  4. A corporate body should provide staff training to cement the culture and spread the message to all associated bodies.
  5. Ensure due diligence procedures are carried out throughout the company.
  6. The procedures should be subject to ongoing monitoring and review process.

Please contact us if you require further information on this issue.