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CRIMINAL FINANCES ACT 2017 | BDO UK
THE CORPORATE CRIMINAL OFFENCES The journey so far
The Corporate Criminal Offences, enacted as Sections 45 and 46 of the Criminal Finances Act 2017, addressed the perceived gap in the law that made it difficult to hold a corporation to account when its representatives committed the criminal offence of facilitating tax evasion. In summary, the legislation means that if an “ associated person” of a business does criminally facilitate tax evasion, and the business is unable to demonstrate that it had reasonable procedures in place to prevent such facilitation, the business is guilty of a criminal offence. The consequences of a prosecution include unlimited fines, reputational damage and the likelihood of regulatory sanction . “Associated person” is defined very widely and includes any person (individual or corporate) who represents (or provides a service for or on behalf of) the business - employees, contractors, agents, and in certain circumstances external suppliers.
In line with HMRC Guidance, first carry out a documented risk assessment, the purpose of which is to highlight potential risk areas and develop an Implementation Plan where remedial actions may be required.
Next steps typically include roll out of CCO policies, procedures, communication internally and externally (e.g., with suppliers and other ‘associated persons’), implementing new processes as needed, and training.
BDO has assisted businesses from all sectors in taking steps to help ensure that, should the need arise, they can demonstrate that reasonable steps have been taken to prevent the facilitation of tax evasion. Our work is tailored according to the size, complexity and sector of the business, and we offer various scope options as set out in pages 8-9.
A GLOBAL REACH
The Foreign offence
The Domestic offence
Requires evasion of tax anywhere in the world
Requires evasion of tax in the UK
Relevant to any corporate (whether incorporated in the UK or not) carrying out a business or part of a
Relevant to any corporate, wherever based or incorporated, providing services to UK taxpayers or with UK supply chain.
business in the UK, or if the Criminal Act of facilitation of tax evasion occurred in the UK.
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The global scope of the legislation brings with it significant risks that should be included in the CCO risk assessment. The scope is broad and overseas businesses can be caught by having a branch, place of business or representative in the UK.
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