The Criminal Finances Act 2017 will create a corporate offence of failure to prevent tax evasion. The policy agenda behind this offence is to encourage tax businesses to prevent their employees aiding clients to evade tax.

In recent years we have supported many businesses to make the changes to their policies and procedures necessary to comply with the requirements of the Bribery Act 2010. The Criminal Finances Act 2017 follows the same approach of criminalising a business which fails to prevent tax offences by others, and calls upon tax businesses to look at their procedures again.

As you will know:-

  • Until now tax evasion has been an offence.
  • However a tax business has not been guilty of an offence even if employees of the business help a taxpayer to evade tax.
  • So until now, if a banker, accountant, financial advisor or lawyer facilitated tax evasion by a customer/client the banker or accountant was guilty of an offence.
  • But the business employing the banker, accountant financial advisor or lawyer was not guilty.
  • That was the case even if the tax business tactically encouraged employees to aid customers/clients to evade tax.
  • That is now changing with the Criminal Finances Act 2017.
  • The Act creates a new offence of corporate failure to prevent tax evasion.
  • Where the bank or accountancy firm employee aids a taxpayer to evade tax then the firm is guilty of an offence unless it can show it had reasonable procedures in place to prevent tax evasion.
  • A business found guilty of an offence will be subject to a fine. For serious cases prosecuted on indictment there is no upper limit to the fine the court can impose.
  • The offence is expected to come into force in September 2017.
  • In the meantime HMRC has published draft guidance to help businesses introduce reasonable prevention procedures.