Corporate

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 adviser 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 adviser or lawyer was not guilty.
  • That was the case even if the tax business tacitly 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  • In the meantime HMRC has published draft guidance to help businesses introduce reasonable prevention procedures.
Paul Marshall

Paul Marshall

Partner at Brodies LLP
Paul leads Brodies’ Corporate Crime and Investigations team. He has more than a decade of experience conducting and managing internal investigations for clients who suspect that something has gone wrong within their business. He advises and support clients facing investigation by the police and specialist regulators
Paul Marshall