Corporations could be prosecuted if they fail to prevent staff from criminally facilitating tax evasion under a new HMRC law that comes into effect this weekend.
It is already a crime to evade tax, or deliberately help another person to do so, but on behalf of the majority of taxpayers who pay what is due, the UK government is now taking an even firmer stance on corporate fraud in a move designed to drive a change in corporate culture.
From today, the Criminal Finances Act 2017 introduces two new criminal offences – one applying to the evasion of UK taxes and one applying to the evasion of foreign taxes.
The offences hold corporations and partnerships criminally liable when they fail to prevent their employees, agents, or others who provide services on their behalf from criminally facilitating tax evasion. This is a significant change from existing law under which they can only be found liable for criminally facilitating tax evasion if the most senior members of the organisation – typically the board of directors – are aware of the facilitation.
The Financial Secretary to the Treasury, Mel Stride MP said:
Tax evasion is a crime and takes away from the money we need to fund our vital public services.
The vast majority of businesses play by the rules but we must ensure that those that don’t are accountable for their actions.
The new offences will ensure that companies doing business in the UK take reasonable steps to prevent their staff from facilitating tax evasion.