Corporate Criminal Offences: The Criminal Finances Act 2017

This legislation introduced a series of corporate criminal offences aimed at holding companies accountable for facilitating tax evasion. The Act represents a major shift in the legal landscape, making it a requirement for businesses to adopt robust anti-fraud measures.

Key Provisions Of The Act

The central plank of the Criminal Finances Act 2017 is the introduction of the offence of failing to prevent the facilitation of tax evasion. This applies to both UK and non-UK businesses with a presence in the UK. It makes companies criminally liable if they fail to prevent their employees, agents, or associated persons from facilitating tax evasion, whether in the UK or overseas.

What sets this legislation apart is the concept of strict liability. Under these provisions, a company can be held criminally liable even if senior management or the board of directors had no knowledge of the illicit activities taking place within the organisation. The burden of proof rests on the company to demonstrate that it had adequate procedures in place to prevent tax evasion facilitation.

Implications for Corporations

• Companies now bear a greater responsibility for the actions of their employees and associated persons. They must actively prevent and detect tax evasion facilitation within their organization.
• Corporations must conduct thorough due diligence on their associates, including suppliers, contractors, and agents, to mitigate the risk of being unwittingly involved in tax evasion.
• Businesses are encouraged to adopt robust compliance programs and reporting mechanisms to identify and address potential instances of tax evasion facilitation promptly.
• Companies should regularly assess their exposure to the risk of tax evasion facilitation and tailor their prevention procedures accordingly.
• It is crucial for businesses to invest in training and awareness programs to educate employees about the risks of tax evasion and the importance of compliance.