New criminal offence: failing to prevent the facilitation of tax evasion
A new corporate offence of failing to prevent the facilitation of tax evasion came into force on 30 September 2017. The offence, under the Criminal Finances Act 2017, is punishable by an unlimited fine.
A company (or partnership) will be guilty of the offence if it fails to prevent an employee, agent or any person performing services for it from criminally facilitating the evasion of UK or foreign tax. However, there is a defence where the company can show either that it has in place reasonable “prevention procedures" designed to prevent tax evasion facilitation from occurring, or that it is not reasonable in the circumstances to have any procedures in place.
Companies will therefore need to assess their exposure to risk and, where appropriate, implement proportionate procedures to counteract that risk. The Government has published detailed guidance to assist with this. Some employers may also wish to include express provisions in their employment contracts prohibiting employees from engaging in the facilitation of tax evasion and requiring compliance with their policy on its prevention.
If you are considering including such a provision in your employment contracts or need help with your risk assessment or with drafting your policy, please get in touch with your usual Doyle Clayton contact or email email@example.com.
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