Corporate Tax Offences

Since 30 September, 2017 companies and partnerships that do not have reasonable procedures in place to prevent employees, agents or subsidiaries from facilitating tax evasion may be prosecuted.

There are two types of criminal offence:

  1.  Failure to prevent facilitation of UK tax evasion. 
  2.  The failure to prevent facilitation of non-UK tax evasion.

These criminal offences were created by sections 45 and 46 of the Criminal Finances Act 2017.

There are three elements to both the UK and the non-UK offences which the prosecution have to prove in order to convict:

  1. A taxpayer commits tax evasion, i.e. cheating the public revenue or fraudulent evasion of tax or the foreign equivalent;
  2. An employee, agent or subsidiary of the company or partnership is acting on behalf of the company or partnership when the tax evasion is committed and facilitates the tax evasion; and
  3. The company or partnership fails to prevent the employee, agent or subsidiary from facilitating the tax evasion.

For the non-UK offence, two additional conditions must be met:

  • the tax evasion and the facilitation of that evasion must be criminal offences in both the UK and the non-UK territory; and
  • the company or partnership is incorporated or formed in the UK or carries on business in the UK or the facilitation of the tax evasion occurs in the UK.

It is a defence for the company or partnership to prove that when the tax evasion occurred, it had reasonable procedures in place to prevent the facilitation or that it was not reasonable in all the circumstances to expect them to have any prevention procedures in place.

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