HMRC has announced that The Criminal Finance Act 2017 (the “Act”) will come into force from 30 September 2017.
The Act introduces a new corporate criminal offence of failure to prevent the facilitation of tax evasion both in the UK and abroad. The offences are strict liability and do not require proof of the involvement of senior management, meaning a company can be held to account for the actions of its employees.
The potential fines are unlimited and there is only one statutory defence. This refers to whether, if at the time of the offence, the company had in place reasonable prevention procedures or it was unreasonable to expect such procedures to be in place.
Implementing preventative procedures could be a large task, particularly for global companies. Despite this a survey in May revealed that 76% of UK executives were not aware that the new offences were being introduced.
As reported in the below article the ‘lack of awareness from businesses and HMRC preparing to take action could be a lethal combination’.
It has now been confirmed that, as expected, legislation providing for new corporate criminal offences of failure to prevent the facilitation of tax evasion will have effect from 30 September this year. The new offences, contained in the Criminal Finances Act 2017, will make businesses vicariously liable if an employee or other 'associated' person criminally facilitates tax evasion whilst acting in that capacity for the business, even if the senior management of the business was not involved or aware of what was going on.