Failure to prevent facilitation of tax evasion—compliance issues

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Failure to prevent facilitation of tax evasion—compliance issues
  • The offences
  • Criminal tax evasion by a taxpayer under existing law
  • Criminal facilitation of the tax evasion by an associated person
  • Failure by the organisation to prevent the criminal facilitation
  • The defence
  • Who can commit the offences?
  • Branches and subsidiaries
  • Joint ventures
  • Referrals
  • More...

Failure to prevent facilitation of tax evasion—compliance issues

The Criminal Finances Act 2017 (CFA 2017) introduced a corporate offence of failure to prevent facilitation of tax evasion, which came into force on 30 September 2017.

The government has also issued guidance which sets out its expectations on compliance systems. This Practice Note is based on the final legislation and guidance.

The government guidance should be considered and applied in a risk-based and proportionate way. This includes taking account of the size, nature and complexity of your organisation. A small organisation and a large multinational organisation may implement the principles in very different ways: what is reasonable for a small business in a low-risk sector may be entirely unreasonable for a large business in a high risk sector.

The government recognises that any regime which is risk-based and proportionate cannot be a zero-failure regime. If you can demonstrate you have put in place reasonable prevention procedures that identify and mitigate your tax evasion facilitation risks, prosecution is unlikely as you will be able to raise a statutory defence.

The Law Society has also published Criminal Finances Act 2017 guidance for law firms, which was approved by the chancellor on 21 November 2018. According to the Law Society, the chancellor considers that its guidance is consistent with the Government guidance for the corporate offences of failure to prevent the criminal facilitation

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