Criminal Finance Act 2017
Source: HMRC Press Release 30 September 2017
From 30 September 2017, the Criminal Finances Act 2017 introduces two new criminal offences – one applying to the evasion of UK taxes and one applying to the evasion of foreign taxes.
The offences hold corporations and partnerships criminally liable when they fail to prevent their employees, agents, or others who provide services on their behalf, from criminally facilitating tax evasion. This is a significant change from existing law under which they can only be found liable for criminally facilitating tax evasion if the most senior members of the organisation – typically the board of directors – are aware of the facilitation.
Source: Akin Gump Strauss Hauer & Feld LLP via mondaq 15 May 2017
“The Criminal Finance Act 2017 received Royal Assent on April 27, 2017, making its way onto the statute book before the halting of Parliamentary business ahead of this year’s general election. As well as giving enforcement agencies further powers to recover the proceeds of crime and tackle money laundering, the Act introduces two new criminal offences for businesses that fail to prevent the facilitation of tax evasion.
Businesses should now be reviewing their internal risk assessment processes to ensure that adequate prevention procedures are in place ahead of the implementation date for the new law, which is expected to be September 2017.
The first of the new offences relates to the evasion of UK tax (the “Domestic Offence“), whereas the second relates to the evasion of foreign tax (the “Foreign Offence“).
In each case, liability for the relevant business will be strict unless the business can prove that it had in place reasonable measures to prevent the facilitation of the tax evasion (or that it was unreasonable in all of the circumstances to expect it to do so).
The new offences are cast widely and will apply to all businesses, including funds, portfolio companies, fund managers, special purpose vehicles and others in the financial services sector, which is a particular target and likely to be most affected.”