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Facilitation of tax evasion – considerations for banks

Our recent Talking Business blog took a general look at the new facilitation of tax evasion offences. Here we have expanded on that to focus on how these are relevant to banks.

Two new corporate offences relating to tax evasion were introduced in September 2017. The offences cover tax evasion in the UK and overseas and apply to companies, partnerships and LLPs.

The new offences essentially mirror the existing ones relating to acts of bribery. So a company is liable for the tax evading actions of its ‘associated persons’, which will include employees and agents.

The only defence available to a company that may be guilty of a tax evasion offence is to demonstrate that it had reasonable prevention procedures in place. This is very similar to the adequate procedures defence to the bribery offences. You can read about the requirements under the Bribery Act here.

If found guilty of a tax evasion offence, a company could face an unlimited fine, a confiscation order or a serious crime prevention order. It could also be banned from entering into public procurement contracts.

3-stages

To be liable for one of the new offences, a three stage process must be satisfied.

  • Stage one: there is criminal tax evasion by a legal entity or an individual;
  • Stage two: there is criminal facilitation of the tax evasion by a person associated with the company; and
  • Stage three: the company failed to prevent the associated person from acting in that way by not having reasonable prevention procedures in place.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.