Failure to prevent the facilitation of tax evasion - reasonable procedures

By Andy Brown, Julian Balson

09-2018

From 30 September 2017, a company may be criminally liable where it fails to prevent its employees or other associated persons from criminally facilitating tax evasion. This guide outlines the steps that companies need to take to demonstrate that they have 'reasonable  procedures' in place.

Part 3 of the Criminal Finances Act 2017 contains two new criminal offences which create strict liability for companies if any of their associated persons (employees, agents or any other person who performs services for or on their behalf) criminally facilitate the evasion of either UK or foreign tax respectively.  The only defence is for a company to demonstrate that it had put in place reasonable procedures to prevent its associated persons from facilitating tax evasion or it was reasonable in the circumstances for it to have no such procedures.  All businesses therefore need to consider the impact of these offences and what steps they need take to ensure that the defence is available to them.

How can Bird & Bird help?

We combine the experience of designing and delivering financial crime compliance programmes and defending clients who are being prosecuted for tax evasion.  We understand how these new offences are likely to be detected and investigated, how a trial by indictment might be avoided (through the agreement of a Deferred Prosecution Agreement) and how any trial might play out in front of a jury composed of ordinary members of the public.  We consider those lesssons invaluable when designing a set of preventive procedures which will not just look good on paper but actually work in practice.

View the guide >