Fraud Insights: Failure To Prevent Facilitation Of Tax Evasion

The new regime of failing to prevent the facilitation of tax evasion came into force on 30 September 2017, pursuant to Part 3 of the Criminal Finances Act 2017 (the "Act"). The Act has created two offences; failure to prevent facilitation of UK tax evasion (the "UK Offence"), and failure to prevent facilitation of foreign tax evasion (the "Foreign Offence"). The offences apply to companies and partnerships, and apply when the following requirements are satisfied:

Stage One - criminal tax evasion by a taxpayer (either by an individual or an entity); Stage Two - criminal facilitation of the tax evasion by an "associated person" of the relevant body acting in that capacity; and Stage Three - the relevant body failing to prevent the associated person from committing the criminal facilitation act. The UK Offence applies to all businesses, regardless of where they are located. The Foreign Offence applies to a relevant body (i) incorporated under UK law; (ii) carrying on a business or part of a business in the UK; or (iii) any aspect of the foreign tax evasion facilitation offence takes place in the UK. An associated person could be an...