Our Tax Disputes and Investigations Team launches a Toolkit to comply with the Criminal Finances Act

On 30 September 2017, Part 3 of the Criminal Finances Act 2017 (the "CFA") came into force creating two new corporate criminal offences:

• the failure to prevent the facilitation of tax evasion relating to UK tax; and
• the failure to prevent the facilitation of tax evasion relating to foreign (non-UK) tax.

In the same vein as the UK's Bribery Act equivalent of 'corporate failure to prevent bribery', these are strict liability offences and have extra-territorial effect. This means that it is not necessary for a prosecutor to show that a company's Board or senior management knew of the facilitation of tax evasion by one of its associated persons.

Only those businesses that can show that they have 'reasonable preventative procedures' in place have a defence in law. It also does not matter where the company is located as long as the tax being evaded is UK tax. Those companies with a direct nexus to the UK could also be caught by non-UK taxes being evaded.

Those found guilty of the offences can be at risk of criminal prosecution, unlimited fines, would likely face reputational damage and could be barred from bidding for public sector contracts.

Over the past three years we have worked with clients in a number of sectors focusing on bespoke solutions for those most at risk. We have now designed the CFA Toolkit to help a wider range of clients implement their procedures in a low cost and time effective manner.
Watch our short video for an overview of the Toolkit:


Why now?

An article in the Times suggests HMRC are ramping up their criminal investigations. Previous research commissioned alongside Freedom of Information responses shows that awareness of, and in turn compliance with, these offences is still very low. Only a small number of the businesses surveyed were actually aware of the Act and had made changes because of it. HMRC will regard larger businesses with no reasonable procedures in place as automatically high risk and will face higher scrutiny of their affairs. Large multinational groups are equally at risk as those with a sole UK presence.

In our experience, many businesses still believe this doesn’t apply to them and they have no risks; put simply, if you are based in the UK or conduct any business here, it applies to you and using our Toolkit is taking reasonable procedures!

What does the CFA Toolkit do?

The CFA Toolkit is hosted securely online and provides a cost effective (one price no matter the size and complexity of the client) step-by-step solution for those businesses which currently have no or limited procedures in place.

For further information please contact any member of the London tax disputes and investigations team.


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