Part 3 of the Criminal Finances Act 2017 entered into force on 30 September 2017, which means that organisations may now be criminally liable for failing to prevent the facilitation of tax evasion within both the UK and overseas. This may lead a form of vicarious liability, with potential criminal conviction and an unlimited fine, for organisations who fail to recognise and take appropriate steps to combat tax evasion amongst their workforce.
Organisations should note, in particular, that:
• both corporations and partnerships are within the scope of the new offences, wherever they are incorporated or formed; • they do not need to be involved in, or aware of, any tax evasion in order for criminal liability to arise;
• the acts of any ‘associated person’ can lead to liability – this is a broad term that encapsulates an organisation’s employees, workers, agents and any other person who performs services on its behalf; and • they will benefit from a statutory defence if, at the relevant time, reasonable ‘prevention procedures’ designed to mitigate tax evasion were in place. Such measures may include regular risk assessments, the implementation of new/updated policies (along with top-level commitment), detailed due diligence and revised training programmes.
Our dedicated tax team have prepared a detailed analysis here, along with a user-friendly flyer setting out how we can help you comply with the new requirements here. Employment partner James Froud’s recent insight can also be read as part of a CIPD article on the new regime, available here.