Failure to Prevent the Facilitation of Tax Evasion

The Criminal Finances Act 2017 has brought in a new offence where a body corporate will be liable and possibly subject to unlimited fines for the failure to prevent the facilitation of tax evasion. The only defence a body corporate has is having “reasonable procedures” in place to prevent the facilitation of tax evasion.


The purpose of this legislation is to force all body corporates in being actively involved in the prevention of tax evasion. Staff training, clear reporting and strong corporate governance are required for all companies and partnerships. These are the only defence against this new offence.


The Criminal Finances Act is extremely broad and far reaching. It covers both the evasion of UK tax and foreign tax. Secondly, it does not just apply to UK companies and partnerships (body corporates). It applies to all the body corporates including those which have been incorporated or formed outside the United Kingdom. Thirdly, an offence can be caused by an “associated person”. This is not just employees, agents and sub-contractors, but will also include work introducers, distributors and anybody who acts on behalf of the body corporate anywhere in the world.

An offence is committed when an “associated person” helps to facilitate tax evasion. This leaves the body corporate subject to unlimited fines. The definition of tax evasion has not changed.

The key and only defence is having reasonable procedures in place.

Need to Act Now

An indication of “reasonable procedures” is given in the guidance notes published by HM Revenue & Customs and should include the following:

  • A risk assessment needs to be carried out;
  • Effective and proportionate procedures need to be communicated to all and implemented;
  • Ongoing monitoring of these procedures to ensure they are effective and are delivering the required outcomes;
  • Ongoing risk assessments need to be carried out in the future to ensure new areas of risk are identified and new procedures implanted.

Naturally, there should be an immediate focus on the areas of highest risk. Communication will inevitably involve training of all necessary “associated persons”. Clear reporting lines are needed whereby concerns can be raised and acted upon.


This legislation is very similar to the Bribery Act in that the only defence a body corporate has is that staff and all other “associated persons” are trained and aware. It is part of a broader shift by Government to ensure that organisations themselves are responsible for the prevention of offences. The message is clear – ignorance is no longer an excuse. Act now.

If you would like more information on this new offence and what constitutes reasonable procedures, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Forensics team.