Practice Area Articles

The Criminal Finances Act 2017

December 13, 2020

By Paul Hastings Professional

UK Criminal finances act —

Corporate Criminal Offense of Failing to Prevent the Facilitation of Tax Evasion

Simon Airey from the London office of Paul Hastings discusses the new UK corporate criminal offence of failing to prevent their associated persons from facilitating tax evasion, as contained in the Criminal Finances Act 2017. The Act comes into force on 30 September 2017 and has serious implications for companies all over the world. The Act applies to the evasion of both UK and non-UK taxes and duties, and has wide extra-territorial effect. It applies to companies that are incorporated in the UK and to foreign companies that conduct business – or part of a business – in the UK (e.g. via a branch or subsidiary, sales or marketing operations or a mere listing on the London Stock Exchange). However, it also applies to companies that have no connection to the UK where their associated persons facilitate the evasion of UK tax or duty, or where part of the evasion offence occurs in the UK.

“Associated persons” is broadly defined and includes any person of entity that provides services for or on behalf of the company (e.g. employees, agents, intermediaries, subsidiaries, joint venture partners, professional advisers, company service agents, trustees, etc.) The only defence is for a company to prove that it had in place reasonable procedures that had been designed to prevent the facilitation of tax evasion.