Criminal Finances Act

Key facts about the new offence

Let’s be clear – tax evasion is already an offence but now criminal liability can be attributed to the company where it originated, with a corresponding prison sentence and an unlimited fine.

The legislation states that: “A relevant body is guilty of an offence if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with it”.

For a company or partnership to be liable under the Criminal Finances Act, 3 stages must be established:

  1. Criminal tax evasion by a taxpayer under existing law (This could include an Employee Loan Scheme)
  2. Criminal facilitation of the offence by a representative of the company
  3. A corporate body’s failure to prevent a representative from facilitating criminal tax evasion

Defence from criminal liability

If stage one and two have been committed, then the onus is on the company to show that they have put reasonable measures in place to prevent facilitation or that in the circumstances it would have been unreasonable or unrealistic to expect such measures to be implemented.

Recommendations for recruiters

The Criminal Finances Act effectively makes recruitment agency directors responsible for ensuring that no-one associated with their business facilitates tax evasion. The larger and more complex the business, the greater the risk. Don’t forget – management being removed from or unaware of breaches is not considered a defence.

However there are certain measures you can take to mitigate these risks:

  1. Risk assessment
  2. Procedures review
  3. Communication and training
  4. Supply chain audit

Other measures in the Criminal Finances Act

In this guide we have focused on the most relevant provision of the Criminal Finances Act – the new offence of failing to prevent facilitation of tax evasion.

However the Act also covers a number of additional provisions to tackle financial crime, including further powers for authorities to investigate money laundering or terrorist financing and new orders requiring anyone with information of money-laundering to disclose it.

The Act also allows for Unexplained Wealth orders to be served on anyone suspected of a serious crime to explain the source of their wealth.

Get more done – partner with Liquid Friday

Risk of liability under the Criminal Finances Act is yet another encumbrance for recruitment agencies, but our experts can support you with bespoke services ensuring you and your business are protected.

We’ll work with you on a consultative basis to determine your compliance needs – these may include risk assessment, staff training (in-house or via webinar) and supply chain health checks.

The first step is to arrange a free consultation – to do this express an interest below or call us free on 0800 316 6030.

Express an Interest

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To find out more about our business outsourcing services, call us free on 0800 3166 030 or start a chat now.
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