On 30 September 2017, the Criminal Finances Act 2017 made companies and partnerships criminally liable if they fail to prevent tax evasion. The act could be by either a member of staff or an external agent and a business can even be liable in circumstances where they were not involved or where they knew anything about it. Being prosecuted could lead to a conviction and unlimited penalties, so protecting your business is wise.

What businesses should do

The first thing we would advise a business to do is to check their current practices and procedures, as you need to keep risks to a minimum and make sure that you have appropriate monitoring and training of staff at all levels in place. The Act states that owners and managers themselves are responsible for preventing their staff, external agents and consultants from committing tax evasion. The bigger the business, the higher the risk that an activity may occur and be caught. Try our Criminal Finance Act Assessment Tool to get an idea of how your business measures up.

Where someone associated with the business has criminally helped a tax evasion offence, the business needs to prove that they have taken adequate measures to prevent this in their risk assessment. They can do this by applying what are called the 6 guiding principles. A business could only add a statutory defence to the new corporate offence if they can show evidence that they have assessed and applied these 6 principles.

The 6 guiding principles defined by HMRC are:

  • Risk assessment
  • Proportionality of risk-based prevention procedures
  • Top level commitment
  • Due diligence
  • Communication (including training)
  • Monitoring and review

Dains Compliance & Risk service

We recommend starting with the Risk Assessment element of the six guiding principles, before deciding whether to apply the remaining 5.
Having a risk assessment will make sure your business applies a risk-based and proportionate approach.

As part of our service we can offer the following:

  • A revision of an existing policy, or a short form policy statement relating to the Act
  • A risk workshop to identify processes which will need amendment or redrafting and we’ll work with you to make sure that you reduce your exposure to risk
  • Revisions for service, employment contracts and Terms of Business. We can also provide revision to HR related documents, for example the Disciplinary Policy, Grievance Policy, Whistleblowing Policy and the Employee Handbook 
  • Support for top-level management to foster a culture in which activity intended to enable tax evasion is never acceptable
  • Working with the business to ensure that its prevention policies and procedures are communicated throughout the organisation, utilising internal and external communication (intranet/website/email) including training where needed
  • Reviewing the business and adopting due diligence procedures with access to our tax professionals

Not taken our Criminal Finance Act Assessment yet? Find out your score instantly, it only takes a few minutes.  

Get in touch

Should you need further information, or are interested in developing your organisations' stance against the Criminal Finance Act, please email Heidi Webster

Further Information:

HMRC has issued guidance and factsheets on how the new rules work in practice: