The Criminal Finances Act 2017 (‘the Act’) introduced two new corporate criminal offences rendering a company criminally liable for failing to prevent the facilitation of UK or non-UK tax evasion by an employee or anyone acting on behalf of that company.
Position Prior To And Purpose Of The Act| Kangs Financial Offences Advisory Team
- Whilst there existed a criminal offence of facilitating UK tax evasion prior to the Act, it was difficult for the authorities to attach criminal liability of individuals to a company.
- The Act places obligations on a company to impose and exercise control on those associated with it in order to prevent them from facilitating tax evasion.
The Law | Kangs National Financial Offences Defence Solicitors
The Act provides:
- a relevant body is: 1. a body corporate. 2. a partnership.
- a person associated with a relevant body is:
1. an employee of the relevant body acting in their capacity as an employee.
2. an agent other than employee for the relevant body, acting in their capacity as an agent
3. any other person who performs services for or on behalf of the relevant body, who is acting in the capacity of performing such services.
an offence is committed where a relevant body fails to prevent an associated person from committing a UK tax evasion facilitation offence.
it is a defence for the company to show that it had proper prevention procedures in place or that it was not reasonable to expect it to have such procedures in place.
- evasion of UK tax involves:
1. cheating the public revenue or
2. being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax.
- a UK tax evasion facilitation offence involves:
1. being knowingly concerned in, or taking steps with a view to the fraudulent evasion of tax by another person,
2. aiding and abetting, counselling or procuring the commission of a UK tax evasion offence, or
3. being involved art or part in the commission of an offence consisting of being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax.
- a person commits a foreign tax evasion offence when acting in the capacity of a person associated with the company
- the company/partnership is formed under the law of any part of the UK
- that body carries on business wholly or in part in the UK and
- any conduct constituting part of the foreign tax evasion facilitation takes place in the UK.
Sentences for Breach| Kangs Sanctions For Financial Offences Advisors
- any breach of sections 45 & 46 can be dealt with either at the Magistrates’ or Crown Court and is punishable by way of an ‘unlimited fine’
- a financial services firm could face a loss of its Regulatory Licence
- an individual director could face disqualification as a director
- the ‘unlimited fine’ will be calculated by reference to the Sentencing Council Guidelines
How Can We Assist You? | Kangs National Criminal Defence Solicitors
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