Criminal Finances Act 2017 (CFA 17)

The CFA 17 introduced the concept of Corporate Criminal Offences. Since September 2017 it has been possible for businesses to face prosecution for facilitating tax evasion. All companies and partnerships, regardless of size and sector are affected.

Tax evasion and its facilitation are already criminal offence; however, it has historically been difficult to attribute criminal liability to a business when it occurs. Since the introduction of the CFA 17, it is the business that will be subject to prosecution without the need for prosecution of any individual. Successful prosecutions can potentially result in unlimited fines, public record of the conviction and significant reputational damage.

While risk of prosecution rests firmly on the business, it is the actions of ‘associated persons’ that will trigger the events leading to a corporate criminal offence. Associated persons are any person (individual or corporate) who provides services for or on behalf of a business such as employees, contractors and agents.

A business will be guilty of an absolute offence if an associated person commits a UK tax evasion facilitation offence. A tax evasion facilitation offence consists of any of the following;

• criminal tax evasion by a taxpayer under existing law;
• criminal facilitation of this offence by an “associated person” of the corporation i.e. anyone who performs services for or on behalf of the business; and finally,
• the business failed to prevent its representative from committing the criminal.

The Government has confirmed that they do not want to hinder how industry works but rather put in place a revised culture in this country which will lead to making tax evasion, like bribery, a thing of the past.

Whilst the rules will be policed with a gentle touch initially, it is expected in the fullness of time that prosecutions will arise where not only the financial cost could be high but so will the reputational risks as well!

SKS can assist your business in assessing risk and is ready to help you start the process of implementing procedures to ensure you comply with the act. If you require further information, please do not hesitate to contact Stewart Smith (07801 246964) or Steve Simmonite (07778 494124) at SKS.