The UK’s tax evasion crackdown: New criminal offences with an international reach

The Criminal Finances Act 2017 includes two new criminal offences which allow firms to be prosecuted for “failure to prevent facilitation of tax evasion”. A firm can, therefore, commit an offence even if it had no knowledge of the relevant tax evasion, with potential consequences including an unlimited fine, restrictions on its business and reputational damage.

A defence will, however, be available where “reasonable” procedures are in place, designed to prevent a firm’s associated parties facilitating tax evasion.

The new legislation applies to both UK and non-UK firms and extends to acts concerning taxes due to any country, not just the UK. It is therefore highly relevant to businesses worldwide.

Given this increased risk of criminal prosecution for a broad range of UK and international firms, particularly providers of professional services, many have been assessing their level of risk and the steps they can take to have a possible defence if they face prosecution.

The UK Government’s draft Guidance makes it clear there is no one-size-fits-all approach. Each firm has to assess its own level of risk and implement procedures appropriate to its business.

Firms should undertake this work as soon as possible, so they have a possible defence if they become targets for prosecution in the future.

Memery Crystal is well equipped to advise you on the new legislation and how it might affect your business.