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Tomorrow, 30 September 2017, 2 new corporate offences of failing to prevent the facilitation of tax evasion, which potentially imposes liability on employers as a result of their employees’ actions, comes into force.Under the Criminal Finances Act 2017 the offences are committed where a corporate entity or partnership fails to prevent a person associated with it from facilitating UK or foreign tax evasion. "Associated person" is widely defined and covers employees and workers, agents acting on behalf of the relevant body and any person who performs services for or on behalf of the body.

It is a defence for the relevant body to show either that it had in place reasonable "prevention procedures", designed to prevent tax evasion facilitation from occurring, or to show that it was not reasonable in the circumstances to have any prevention procedures in place.

Government guidance on the CFA 2017 can be found here.

The guidance recommends that prevention procedures are put in place by relevant bodies to prevent tax evasion from being committed on their behalf.Those procedures should be informed by the following six principles:-

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

Employers should be considering specific contractual requirements that employees do not engage in facilitating tax evasion and, updating their risk assessments, policies, procedures and training on the prevention of facilitation of tax evasion.

For further information please contact our Employment Law Team on 01484 821 500 or email hilary.garnett@ramsdens.co.uk.