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Press Release

The Criminal Finances Act 2017



United Kingdom

UK companies could be liable for prosecution and unlimited fines when one of the strictest and most wide ranging pieces of tax legislation becomes law.

UK companies could be liable for prosecution and unlimited fines from tomorrow when one of the strictest and most wide ranging pieces of tax legislation becomes law.  According to law firm Fieldfisher, the new Criminal Finances Act 2017 could, within in a few years, generate similar levels of revenue to the Bribery Act of 2010 which last year made around £500 million for the Treasury.

The Criminal Finances Act will make businesses liable for tax evasion committed by their employees or business associates, even when the company can demonstrate they knew nothing about their activities; ignorance will not be a defence.

The Act is also global.  This means that any overseas branch of a company where tax evasion has been committed, could lead to prosecution in the UK of the parent company and an unlimited fine.  The Act even applies to overseas companies which share the same branding as a UK company but which are not technically or legally part of the organisation; the association through the brand will be enough for the Act to apply.

The Act is most likely to affect professional services companies and partnerships including tax and financial advisers, lawyers and private banks, but also any business which is associated with transactions that could facilitate tax evasion.  For example, an agent engaging in, assisting or encouraging tax evasion, that is associated with a principal in the UK, could render the principal criminally liable.

The best defence against the Act for companies will be to ensure that they have reasonable prevention procedures in place.  These will include undertaking a risk assessment, due diligence on associated persons, policies, training and monitoring.

Tony Lewis, corporate crime lawyer at Fieldfisher, comments: "The Criminal Finances Act marks another step in the continued march of the criminal law into the business sphere.  Businesses now face the prospect of criminal liability for facilitation of tax evasion which they were unaware of, committed by persons over whom they have no practical control, anywhere in the world."

Francesca Titus, criminal barrister at Fieldfisher, said: "Prosecutors have long argued that they required law reform before they would be able to hold corporations criminally liable.  The Criminal Finances Act is that long awaited legislation and there is every indication it will be embraced by fraud investigators who will wish to deploy it against businesses of all sizes with a link to the UK."

More information on Fieldfisher's solution called Integrity can be found here.

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