Corporate offences of failure to prevent the criminal facilitation of tax evasion

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Corporate offences of failure to prevent the criminal facilitation of tax evasion
  • Background
  • Overview of the offence
  • Implementing measures and procedures to prevent the facilitation of tax evasion by an associated person
  • Notifying HMRC of a failure
  • Penalties
  • Appeals

This guidance note provides an overview of guidance published by HMRC on the new offence that was introduced with effect from 30 September 2017.

Please use the following link to obtain a copy of the guidance Failing to prevent criminal facilitation of tax evasion ― government guidance on the criminal offences .

Background

Historically, it has been necessary for the authorities to have evidence that the senior members of a relevant body were involved in, or were aware of, the illegal activity before they can be successfully prosecuted. As a result, it has been difficult to hold large multinational corporations accountable for actions taken by associated persons that result in tax evasion. The common law method of criminal attribution may also have acted as an incentive for more senior members within an organisation to ignore criminal acts undertaken by associated persons or for senior members making a decision not to report any illegal tax activities undertaken. As a result many large organisations did not implement good corporate governance and reporting procedures.

Criminal Finances Act 2017, ss 44–52 (subscription sensitive)

The new corporate offences of failure to prevent the criminal facilitation of tax evasion are intended to overcome the difficulties encountered in attributing criminal liability to a relevant body for criminal activities undertaken by an employee or associated person. The new offences focus on the failure to prevent these crimes being facilitated by a person who acts for or on behalf of a relevant body, rather than trying to attribute the criminal act to that body. The offences do not cover crimes committed by the body’s customers and does not require bodies to try and prevent their customers from committing tax evasion. It will also not affect situations where a relevant body provides goods / services to a customer in good faith and has no idea that the customer intends to use

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