New UK criminal offences of failure to prevent facilitation of tax evasion

In our October 2016 briefing, we reported on the publication of the Criminal Finances Bill 2016–17. The Bill introduces a range of new measures to fight financial crime, of which one of the most important and far-reaching is the introduction of new offences of failure to prevent the facilitation of tax evasion. The offences are modelled on the so-called "corporate offence" of "failure to prevent bribery" in the Bribery Act 2010 and renders corporate bodies liable, in certain circumstances, for the acts of their "associated persons", subject only to a defence relating to having in place reasonable prevention procedures designed to prevent them from facilitating tax evasion.

The offences will be of importance to companies in a range of sectors, including in particular the financial sector and professional services firms. They will significantly impact companies' risk profile in relation to tax evasion issues and their compliance programmes. Whilst the Bill may see some amendment during the course of the legislative process, the offences have been subject to quite extensive consultation and appear unlikely to be subject to further radical change.

The offences form part of the government's broader strategy to reduce the level of UK tax evasion, but also have significant extra-territorial scope. In this briefing, Heather Gething, Susannah Cogman, Nick Clayton, Daniel Hudson and Kate Meakin consider the background to the introduction of the offences, the components of the offences, the "reasonable prevention procedures" defence and enforcement mechanics.