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11 August 2017

From 30 September 2017, the Criminal Finances Act 2017 will make companies and partnerships criminally liable if they fail to prevent tax evasion by either a member of their staff or an external agent, even where the business was not involved in the act or was unaware of it.

As you are aware, in the aftermath of the Panama Papers scandal the government gave law enforcement agencies new powers to seize suspected criminal property without bringing a prosecution.

From 30 September 2017, the Criminal Finances Act 2017 will make companies and partnerships criminally liable if they fail to prevent tax evasion by either a member of their staff or an external agent, even where the business was not involved in the act or was unaware of it.

The new rules target deliberate and dishonest behaviour. They do not create any new offences at the individual level - if activity would be considered to be tax evasion under existing law, then it will continue to be so. Likewise, if the activity would not currently be considered tax evasion, then the new law does not make it so.

Our stance

We welcome the new act enforced by the Government. Compliance is at the very core of our business and activities.

Defence

A business may avoid criminal liability where it can show that it had implemented reasonable prevention procedures, or where it can show that in the circumstances it would have been unreasonable or unrealistic to have expected it to have had procedures in place.

What firms should do

Firms will have to ensure that they have reviewed their current practices and procedures to minimise any risks, and to put in place appropriate monitoring and training of staff at all levels. The Act effectively makes owners and managers responsible for preventing their staff and external agents and consultants from committing tax evasion. And the larger and more complex the business, the greater the risk that an activity may occur that could be caught.

More information

If you want to find out more about the potential risks of the changes to the Criminal Finance Act then please call us now on 01252 705 280.

Important documents:

HMRC draft detailed guidance (download PDF)
Criminal Finances Act factsheets
Criminal Finances Act 2017
Explanatory notes to the Bill (download PDF)

Bibliography:

http://www.legislation.gov.uk/ukpga/2017/22/contents/enacted
http://bishopfleming.co.uk/criminal-finances-act-2017-what-you-need-to-know/
https://www.lawgazette.co.uk/legal-updates/criminal-finances-act-2017/5061170.article

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