As of the end of September 2017 the government’s new Corporate Criminal Offences legislation has been in effect. Adding responsibilities with regards to facilitating tax evasion, it is important that all businesses are aware of what their responsibilities are, and how far-reaching the legislation is.

As stated in the introduction to the official government guidance, ‘The Government believes that relevant bodies should be criminally liable where they fail to prevent those who act for, or on their behalf from criminally facilitating tax evasion.’ The legislation aims to make it easier to link businesses facilitating tax evasion to the associated persons committing the actual offences.

What constitutes tax evasion has not changed. For a relevant body to be liable three stages must be met:

  1. The act of tax evasion by an individual or organisation. This can also include taking steps to enable tax evasion, without any tax having been avoided.
  2. The criminal facilitation of tax evasion by an associated person.
  3. Failure, on the part of the relevant organisation, to take appropriate steps to prevent the associated person from carrying out step 2.

One of the most important points for compliant businesses to understand is: who are their associated persons? An associated person is defined as any person acting for or on behalf of an organisation. The contractual status of that person is not necessarily relevant – a sub-contractor working for an agent could just as easily be operating on behalf of an organisation as an employee.

In order to protect itself against prosecution, a business needs to have clearly defined and communicated policy. For help with building or reviewing your policy and its compliance, as well as its communication to all associated persons, get in touch with us.

Download your free guide here to show you how to comply with the Criminal Finance Act 2017.