The UK’s Tax Evasion Crackdown
By Ryan Lynch, Memery Crystal LLP
On 30 September 2017, broad new laws came into force in the UK which make businesses criminally liable where parties associated with them, such as employees and agents, facilitate tax evasion.
The Criminal Finances Act 2017 includes two new criminal offences which allow firms to be prosecuted for ‘failure to prevent facilitation of tax evasion’. A firm can therefore commit an offence even if it had no knowledge of the relevant tax evasion, with potential consequences including an unlimited fine, restrictions on its business and reputational damage.
A defence will, however, be available where ‘reasonable’ procedures are in place, designed to prevent a firm’s associated parties facilitating tax evasion.
The new legislation applies to both UK and non-UK firms and extends to acts concerning taxes due to any country, not just the UK. It is therefore highly relevant to businesses worldwide.
Given this increased risk of criminal prosecution for a broad range of UK and international firms, particularly providers of professional services, many have been assessing their level of risk and the steps they can take to have a possible defence if they face prosecution.
The UK Government’s draft Guidance makes it clear there is no one-size-fitsall approach. Each firm has to assess its own level of risk and implement procedures appropriate to its business.
Firms should undertake this work as soon as possible, so they have a possible defence if they become targets for prosecution in the future.
Ryan LynchMemery Crystal LLP, London, UK
T: +44 207 400 3217
Memery Crystal LLP is a specialist international law firm based in London with an enviable reputation as a commercial legal practice. Their main practice areas include dispute resolution, corporate, real estate, employment, commercial and tax, where they act for a broad range of clients.
Ryan Lynch is a Senior Associate in Memery Crystal’s Dispute Resolution Team. Ryan acts on a variety of commercial disputes and is currently advising a number of UK and international clients in relation to their potential exposure to criminal prosecution under the Criminal Finances Act 2017.
Published: Winter 2017 l Photo: Dmitry Naumov - Fotolia.com