New Corporate Offences Of Failure To Prevent The Criminal Facilitation Of Tax Evasion

The long-awaited new corporate offences of failure to prevent the facilitation of UK and foreign tax evasion (the "Offences") came into force on 30 September 2017.

The Offences, which are set out in Part 3 of the Criminal Finances Act 2017 ("the Act"), are part of the UK Government's drive to combat tax evasion and to "foster and promote economic crime prevention as part of corporate good governance".

Under the Act, it is an offence for a corporate body or partnership (referred to in the Act as a "relevant body"), wherever incorporated or formed: (i) to fail to prevent the facilitation of UK tax evasion offences ("UK Offence"); and (ii) to fail to prevent the facilitation of foreign tax evasion offences ("Foreign Offence"), in either case by a person with whom the relevant body is associated, provided that the person commits the relevant Offence in their capacity as the relevant body's associated person.

The Act's definition of "associated person" is deliberately wide-reaching and includes not only the relevant body's employees, but also agents or any other person or entity who performs services for or on behalf of the relevant body (such as prime and sub-contractors), and, in each case, who is acting in such a capacity at the time they commit the relevant facilitation Offence.

The UK Offence

Three conditions must be met for a relevant body to commit the UK Offence; these are:

there must be criminal (i.e., fraudulent) UK tax evasion by a taxpayer under existing law; there must be deliberate and dishonest criminal facilitation of that tax evasion by an associated person of the relevant body acting in that capacity; and the relevant body must have failed to prevent the associated person from criminally facilitating the fraudulent tax evasion. A relevant body can commit the UK Offence regardless of: (i) where they are incorporated or formed; and (ii) whether the facilitation offence was committed in the UK or overseas, provided that the facilitation offence concerns the fraudulent evasion of UK tax.

The Foreign Offence

The same three conditions applicable to the UK Offence apply in relation to the Foreign Offence (although condition one will relate to the fraudulent evasion of the applicable foreign tax). However, two additional conditions also must be met for a relevant body to commit the Foreign Offence:

there must be a UK nexus, meaning that either: (i) the relevant body is incorporated/formed under UK law or carries on business or part of...

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