The corporate offence of “failing to prevent the facilitation of tax evasion” came into force on 30 September 2017. Now corporations must ensure that they have developed a plan for implementing “reasonable prevention procedures”.
The offence, introduced under the Criminal Finances Act, makes corporations criminally liable in situations whereby:
- There has been criminal evasion of UK or non-UK tax (by either an individual or a legal entity);
- an individual, acting on behalf of a corporation, facilitated the tax evasion; and
- the corporation did not have reasonable prevention procedures in place (or it is unreasonable to expect such procedures to have been put in place).
The offence is strict liability; meaning that the knowledge or intention of the senior management is irrelevant. If convicted, corporations can face unlimited fines, on top of reputational damage and regulatory sanctions which come with a criminal conviction.
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