Employment Law Cases

Tax evasion: new corporate offence

A new criminal corporate offence of failing to prevent facilitation of tax evasion, which potentially imposes liability on employers as a result of their employees’ actions, came into force on 30 September 2017.

The Criminal Finances Act 2017 provides that a corporate body or partnership may commit an offence 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.

The scope of the new offence is broad. A corporate body commits such an offence by being knowingly concerned in, or in taking steps with a view to, fraudulent tax evasion by another person; aiding, abetting, counselling or procuring the commission of a UK tax evasion offence; or being involved art and part in the commission of an offence consisting of being knowingly concerned in, or in taking steps with a view to, the fraudulent evasion of a tax.

An employer will have a defence if it puts in place reasonable preventative procedures (e.g. risk assessments, due diligence assessments and fraud prevention policies and procedures) commensurate with the level of risk. Guidance on the new offence has been published to help employers put in place such measures.