Failure to prevent facilitation of tax evasion—due diligence—employees, agents and intermediaries
Failure to prevent facilitation of tax evasion—due diligence—employees, agents and intermediaries

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

  • Failure to prevent facilitation of tax evasion—due diligence—employees, agents and intermediaries
  • The offences and defence
  • Prevention procedures—the six guiding principles
  • Why should you conduct due diligence and on whom?
  • Acting in the capacity of a person associated with a relevant body
  • Whose actions could you be liable for?
  • How to conduct due diligence
  • Internal or external
  • Level of control and supervision over the associated person
  • Free-standing or integrated into existing systems?
  • More...

Failure to prevent facilitation of tax evasion—due diligence—employees, agents and intermediaries

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 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 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 of tax evasion.

The offences and defence

There are two potential offences, depending on whether the tax evaded is owed in the UK or in a foreign country. Each offence has three core stages, all of which must exist for criminal liability to arise:

There is only one defence to the

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