New Corporate Liability for Failing to Prevent Tax Evasion

September/October 2017

By Eliza Nash of Osborne & Wise

A new corporate offence of failing to prevent the facilitation of tax evasion, which potentially imposes liability on employers as a result of their employees’ actions, came into force on 30 September 2017. An employer may commit an offence (punishable by a fine), if it fails to prevent an employee, agent or any other person who is performing services for the organisation from criminally facilitating the evasion of tax, whether the tax is owed in the UK or in a foreign country. This potentially covers self employed contractors and consultants as well as employees.

An employer will have a defence if it can prove that, when the offence was committed, it had in place such prevention procedures as it was reasonable in all the circumstances to expect it to have in place designed to prevent an associated person from committing an offence, or it was not reasonable in all the circumstances to expect it to have any such procedures in place. HMRC has published guidance on the procedures expected to be put in place. Please contact a member of the OW team for advice in this area, including appropriate clauses for insertion in employment and other contracts and where necessary the introduction of specific policies.