"Stop facilitating tax evasion or face criminal prosecution"

04 October 2017

This is HMRC’s message to corporations following two new offences which came into force on 30 September 2017 through the Criminal Finances Act 2017.

Corporations could be prosecuted if they fail to prevent staff from criminally facilitating tax evasion under a new HMRC law that came into effect on 30 September 2017.

It is already a crime to evade tax, or deliberately help another person to do so, but on behalf of the majority of taxpayers who pay what is due, the UK government is now taking an even firmer stance on corporate fraud in a move designed to drive a change in corporate culture.

The Criminal Finances Act 2017 introduces two new criminal offences - one applying to the evasion of UK taxes and one applying to the evasion of foreign taxes. The offences hold corporations and partnerships criminally liable when they fail to prevent their employees, agents, or others who provide services on their behalf from criminally facilitating tax evasion. This is a significant change from existing law under which they can only be found liable for criminally facilitating tax evasion if the most senior members of the organisation – typically the board of directors - are aware of the facilitation.

Where there is evasion of UK taxes, any company based anywhere in the world can be liable, regardless of whether it has a business presence in the UK

Where taxes other than UK taxes are evaded, any company that is (a) incorporated under the law of the UK; (b) carrying out a business or part of a business in the UK, or (c) has staff criminally facilitate evasion from within the UK, can be liable under the UK criminal law for failing to prevent their staff from criminally facilitating the evasion of foreign taxes.