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The Criminal Finances Act 2017

What is it and who does it apply to?



This summer, Parliament passed the Criminal Finances Act. It came into force on 30 September. Companies and partnerships can be criminally liable where they fail to prevent tax evasion ...

You need to ensure your business doesn't fall foul of the new Criminal Finances Act!

You need to ensure your business doesn't fall foul of the new Criminal Finances Act!

copyright: alphaspirit / 123rf stock photo

This is for any company or partnership operating in the UK and applies to both UK tax and tax due abroad. Anyone acting on behalf of the company (directors, partners, employees, agents and contractors) can fall foul of the law, so it's worth paying attention to this legislation and ensuring you comply with it at all times.

"Penalties for the offence include unlimited fines and confiscation orders!"

There are three stages to both the domestic and foreign tax evasion facilitation offences. As there are additional requirements for foreign offences, I'll only cover UK tax evasion in this blog post.

  1. Criminal tax evasion by a taxpayer, both individuals and legal entities

  2. Criminal facilitation of tax evasion by an ‘associated person’, acting in that capacity

  3. The ‘relevant body’ failed to prevent its representative from committing the criminal act

Stages one and two do not create any new offences as they already apply under previous legislation.

Only a ‘relevant body’ can commit the new stage three offence, so it applies to incorporated bodies (typically limited companies) and partnerships, not individuals.

The new offence is a strict liability offence which means that if stages one and two are committed, the relevant body will be deemed to have committed the new offence.

The defence against the new stage three offence applies where the relevant body has put in place ‘reasonable prevention procedures’ to prevent its associated persons from committing tax evasion offences (stage two), or where it is unreasonable to expect such procedures.

"These procedures are similar to those that can protect organisations under Bribery Act 2010!"

The legislation applies to all companies and partnerships irrespective of size. However, the published guidance states that it is not a ‘one-size-fits-all’ document. It should be considered and applied in a risk-based and proportionate way.

If the assessment concludes the business is low risk, the guidance includes suggested reasonable prevention procedures for lower risk SMEs.

Among the suggested procedures are such matters as:

  • Demonstrating a commitment to prevention of tax evasion by issuing a message from the board of directors against all forms of tax evasion

  • Giving regular training for staff on financial crime detection and prevention

  • Having written terms in all employee and contractor agreements committing them not to engage in facilitating tax evasion

Yes, the Criminal Finances Act 2017 means more compliance issues for businesses but the key to coping with it is to do a risk assessment and then put in place reasonable prevention procedures.

"Would you like to know more?"

If you're at all concerned about the Criminal Finances Act 2017 and how it applies to your business, call me on 01908 774320 or click here to ping me an email and let's see how I can help you.

Until next time ...

Business Godparent

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More about Roger Eddowes ...

Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.