Two new corporate criminal offences of “failure to prevent” the facilitation of UK and foreign tax evasion, contained in the Criminal Finances Act 2017, came into force on 30 September 2017. A body corporate or a partnership (a “relevant body”) may be prosecuted for failure to prevent the facilitation of tax evasion if:

  • a person evades tax;
  • an associate of the relevant body, such as an employee, agent or subcontractor, criminally facilitates that evasion while acting in their capacity as an associate of the relevant body; and
  • the relevant body is unable to show that they had in place reasonable prevention procedures (or that it wasn’t reasonable for prevention procedures to be in place).

Liability can arise whether or not the relevant body had knowledge of the evasion or facilitation, and whether or not the associate intended to benefit the relevant body.

HM Revenue and Customs has published guidance on the new offences which is intended to help body corporates and partnerships understand the types of processes and procedures that can be put in place to prevent employees and other associated persons from criminally facilitating tax evasion. This could include having terms in contracts with employees and contractors requiring them not to engage in facilitating tax evasion and to report any concerns immediately.

Our Corporate Crime team’s detailed briefing on the offences is available here.