The new offence of failure to prevent the facilitation of tax evasion came into force in the United Kingdom on 30 September 2017. It has caused some concern within many industries given its potentially wide remit and the increased media attention accorded to any suggestion of impropriety in relation to tax. Additionally, its jurisdictional scope has given rise to questions even for wholly non-UK groups or entities.
The offence was introduced as a response to the activities of certain personnel within large institutions. Such individuals assisted tax evaders in ways that, while not endorsed by the institution concerned, were certainly not the focus of robust objection. There was no law available in the UK under which the institution could be criminally liable because, for most criminal offences, a corporate can only be guilty of a criminal offences if the conduct was carried out by the ‘directing mind and will’ of the entity. This is a challenging concept, particularly in organisations above a certain size, as it requires proof of involvement at or close to board level. As a solution to the this, the new offence, which is modelled on the corporate ‘failure to prevent bribery’ offence in section 7 of the Bribery Act 2010, effectively ‘layers’ a corporate strict liability offence over pre-existing offences of tax evasion and criminal facilitation. This point is an important one, which can sometimes be overlooked. Tax evaders and those who assist them are still committing the same criminal offences; now, however, relevant bodies of whom facilitators are associates also commit an offence unless they have an appropriate defence in relation to internal procedures.
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