Government clamps down on tax evasion with new corporate criminal offences

With effect from 30 September 2017, the Criminal Finances Act 2017 (the “Act”) introduced (amongst other things) two new corporate criminal offences relating to the failure to prevent the facilitation of UK and non-UK tax evasion.

Under the new act ‘relevant bodies’ will be held liable for the actions of their employees and ‘associated persons’ that criminally facilitate tax evasion.

The two offences are strict liability offences meaning no knowledge or intention is required. It is also not necessary for the evader or facilitator to have been prosecuted for the relevant body to be liable.

If prosecuted, the relevant body could face fines and other ancillary sanctions including confiscation and serious crime prevention orders. Such prosecution would also seriously damage the relevant body’s reputation as well as client confidence.

Although the offences impose strict liability there is a “reasonable prevention procedures” defence. To rely on this defence, the relevant body has to be able to show it had reasonable procedures in place to prevent the offences occurring. Guidance suggests that such procedures should include a risk assessment of current procedures, ensuring employees and associated persons receive adequate training and conduct ongoing monitoring to ensure compliance with the Act.