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New corporate criminal offences of failure to prevent tax evasion effective from 30 September

Legislation that provides for new corporate criminal offences of failure to prevent tax evasion will have effect from 30 September this year, it has been confirmed.13 Jul 2017

Regulations which state the commencement date for the new offence were introduced on Wednesday.

The new corporate criminal offences of failure to prevent tax evasion are contained in the Criminal Finances Act, which received Royal Assent in the so-called 'wash up' period in parliament ahead of the UK general election.

The 30 September application for the new offences taking effect corresponds with the date on which the first automatic exchanges of information under the common reporting standard must take place by.

Tax expert Jason Collins of Pinsent Masons, the law firm behind Out-law.com, said: "The commencement date of 30 September does not come as a surprise and businesses should now be focusing on conducting a risk assessment and ensuring that they have an implementation plan in place by this date to introduce new proportionate prevention controls and procedures."

"HMRC has invested heavily in its criminal investigation teams and we don't expect HMRC to be slow off the mark in starting investigations under the new law.  No doubt they are looking for a few major scalps," he said.

The new offences will make businesses vicariously liable for the criminal acts of their employees and other 'associated' persons who facilitate tax evasion whilst performing services for them, even if the senior management of the business was not involved or aware of what was going on.

The offences apply to both companies and partnerships.

The first will apply to all businesses, wherever located, in respect of the facilitation of UK tax evasion. The second will apply to businesses with a UK connection in respect of the facilitation of non-UK tax evasion.

Businesses will have a defence if they can prove that they had reasonable prevention procedures in place to prevent the facilitation of tax evasion, or that it was not reasonable in the circumstances to expect there to be procedures in place.

In May, Pinsent Masons revealed that research it had commissioned had found that 76% of UK executives were not aware that the new offences were being brought in.