Tax Alert – September 2018 - Corporate criminal offences in the UK for failure to prevent the facilitation of tax evasion

By Laurence Clot, Andy Brown, Julian Balson, Sophie Dorin, Alexandre Polak, Thibaut Hubert

09-2018

Since 30 September 2017, the UK has introduced two new criminal offences which create strict liability for companies if they failed to prevent the facilitation of tax evasion.

A company can now be held criminally responsible if it does not put in place reasonable procedures to prevent its associated persons (employees, agents or any other person who performs services for or on their behalf) from facilitating tax evasion.

Evasion of UK tax

In the event of UK tax criminally evaded, there is a risk for all companies that have not established any reasonable procedure, regardless of their status or wherever it is formed or operates.

There is no requirement for the tax evader, the associated person or the company to be in the UK when the evasion (or facilitation) occurred.

Evasion of foreign tax

In the event of facilitation of foreign tax evasion by an associated person, a company will be liable if:

  • it is formed under UK law; or
  • carries on a business or part of a business in the UK (which include a representative office); or
  • any part of the criminal facilitation of that tax evasion took place in the UK.
Liability

No knowledge or intent is required for the company to be liable. There is also no requirement for tax evader to have been prosecuted for evasion, or for the associated person to have been prosecuted for facilitation.

Defense for the company

The company has to demonstrate that it had put in place reasonable procedures to prevent the facilitation of tax evasion by its associated persons or that it was reasonable in the circumstances for it to have no such procedure in place.

Penalties

Unlimited fine, confiscation proceedings, order requiring the organization to establish a preventive procedure.

Our tax teams can assist you in the prevention of risks and the implementation of "procedures" necessary to prevent any risk of criminal sanctions.