Tax Evasion, Its Facilitators, And The New Corporate Duty To Stop Them

The Criminal Finances Act 2017 contains a number of provisions aimed at tackling financial crime, which are expected to come into force later this year. The government has now announced the timetable for implementing Part 3 of the Act, which is about the new 'corporate' offences of failure to prevent the facilitation of tax evasion.

The concept of the offences is undeniably complex, and is best understood when broken down into its three constituent parts.

The first of these is 'failure to prevent', a concept adapted from the Bribery Act 2010, which makes a 'relevant body' (which includes all partnerships, as well as corporations) liable for the actions of 'associated' persons (employees, agents, or others performing services on its behalf), when acting in that capacity. A defence is available if the body can prove that it had reasonable procedures to prevent such actions, or that it was reasonable for it not to have any such procedures.

The second part of the concept is 'facilitation', which here means an offence comprising (a) 'being knowingly concerned in, or taking steps with a view to' or (b) 'aiding, abetting, counselling or procuring' an offence of tax evasion, or (c) 'being involved art and part' in an offence falling within (a). (The phrase 'art and part' comes from Scots law, and is arguably a little obscure to be included in a UK statute. Merriam-Webster defines it as 'indirect participation in a crime by instigating, counselling, or assisting the actual perpetrator'.) At the risk of oversimplifying, this part of the concept is essentially about people who do things that help others evade tax.

The third part of the concept is 'tax evasion' itself, which is at least reasonably self-explanatory, but also the reason why two offences were needed - one to cover UK tax evasion offences, and the other to cover foreign tax evasion. To be included in the second category, the conduct concerned would have to be 'regarded by [UK] courts... as amounting to' facilitation (as defined in (a) above).

Drawing the three strands together, the...