The Criminal Finance Act 2017 (“the Act”) came into effect on 30/09/17, and comes with the same sort of guidance as with Bribery Act.

In simple terms the Act imposes a criminal liability on businesses that fail to prevent the facilitation of tax evasion. That extends to preventing their employees, agents, or representatives facilitating tax evasion.

There are two offences created by the Act.

  • Firstly the failure to prevent an associated person from criminally facilitating a UK tax offence.
  • The second one is failing to prevent an associated person from criminally facilitating a foreign tax evasion offence.

The definition of associated person includes any person who performs a service for or on behalf of you – they can be a corporate body or an individual.

The offences under the Act are called strict liability offences. That means that your company or your management need not have actively participated in, known about, or even suspected the associated person’s criminal activity. The associated person’s facilitation of criminal tax evasion, in the UK or overseas, will be enough to impute you with criminal liability.

That’s why this is very similar to the failure to prevent bribery under the Bribery Act 2010. The implication for you is that your company could be convicted of a criminal offence despite senior management being unaware that an associated person has been responsible for criminally facilitating tax evasion.

The only defence you will have is to show that you had a reasonable prevention procedure in place when the offence was committed.

My advice is that you put in place the following six guiding principles produced by the government:

1 Carry out a risk assessment. Look at your employees, your agents & your service providers & assess what sort of motives, opportunities or means they have to criminally facilitate tax evasion.

2 Proportionality of risk based prevention procedures. Look at how those risks can be managed.

3 Top level commitment. Remember that it’s your company on the line too.

4 Due diligence. This must be carried out in respect of all associate persons.

5 Communication and training. It is crucial that all staff are trained.

6 Monitoring and review.

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