Corporate criminal offence failure to prevent the facilitation of tax evasion

Your legal obligation

All corporate bodies (including LLPs) and partnerships, regardless of size, have a legal obligation to ensure that ‘reasonable prevention measures’ are in place to prevent employees and other associates (for example, subcontractors) criminally facilitating tax evasion while acting on behalf of the business. If an associate is discovered to have criminally facilitated another’s tax evasion while acting on behalf of the business, the business is criminally liable to unlimited penalties unless the defence can be mounted that reasonable procedures were in place to prevent the criminal facilitation from occurring.

Obtain peace of mind and undertake a risk assessment

A risk assessment is fundamental to responding to the legislation. If the risk of criminal facilitation of tax evasion is assessed to be low, it may be that no significant additional measures are required. However, without having undertaken and documented a risk review or notified employees of what constitutes criminal facilitation, businesses may struggle to mount such a defence.

HMRC has the power to issue unlimited fines for businesses that fail to prevent the facilitation of tax evasion. There are currently 11 live criminal investigations and 22 cases under review across ten different business sectors, including financial services, construction, labour provision, software development and the oil industry.