BKM509500 - Interaction of the Code with other measures: corporate offences for failing to prevent criminal facilitation of tax evasion

CFA17/PART3 introduced corporate offences for failing to prevent criminal facilitation of tax evasion.

Before the introduction of these corporate offences, attributing criminal liability to a relevant body required prosecutors to show that senior members of that relevant body were involved in and aware of the illegal activity. This meant that those bodies that refrained from implementing good corporate governance and reporting procedures were harder to prosecute, and lacked incentive to invest in preventative procedures.

The legislation aims to tackle crimes committed by those who act for or on behalf of a relevant body. The Government introduced guidance on these corporate offences on 1 September 2017.

The legislation does not hold relevant bodies to account for the crimes of their customers, nor does it require them to prevent their customers from committing tax evasion. Nor is the legislation designed to capture the misuse of legitimate products and services that are provided to customers in good faith, where the individual advisor and relevant body did not know that its products were intended to be used for tax evasion purposes.

As stated in BKM506800, where a bank is under criminal investigation in relation to a tax matter, any consideration of the Code will normally be postponed until the criminal proceedings are concluded.

Where a bank is prosecuted under the corporate offence for failing to prevent criminal facilitation of tax evasion, HMRC will subsequently review the bank’s compliance with the Code.