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A new corporate offence of failure to prevent the criminal facilitation of tax evasion was introduced by the Criminal Finances Act 2017.

Key points from HMRC's guidance include:

  • The offence can be committed by companies or partnerships, but not individuals.
  • The offence relates to tax evasion both in the UK and in overseas countries.
  • Ignorance of actions by agents will not be an acceptable defence. Reasonable prevention measures will be required, unless it can be shown that they were disproportionate to the level of risk.
  • The overseas conduct of UK incorporated companies could give rise to an offence where under UK law that conduct would be an offence and the overseas jurisdiction has an equivalent tax evasion offence.
  • UK tax offences will be investigated by HMRC with foreign ones dealt with by the Serious Fraud Office or Crown Prosecution Service.

Action points

  1. Consider a risk assessment to identify the level of risk and whether there are reasonable mitigation procedures that can be adopted.
  2. Put in place appropriate policies and procedures to deal with the risks in your particular sector.
  3. Where procedures are put in place, senior management should keep their effectiveness under review.