Failure to Prevent Tax Evasion Compliance Check

The Criminal Finances Act 2017 created two strict-liability corporate offences: failure to prevent the facilitation of UK tax evasion, and failure to prevent the facilitation of foreign tax evasion. Unlike most corporate crime legislation, these offences apply to a business of any size or structure — companies, partnerships, LLPs and even sole traders with staff — if an “associated person” (an employee, agent, contractor or anyone performing services for the business) criminally facilitates someone else’s tax evasion in the course of that work, even without the business’s knowledge. HMRC does not need to prove the business intended the evasion; the only defence is showing that “reasonable prevention procedures” were in place at the time, modelled on the six principles HMRC published alongside the Act: risk assessment, proportionality, top-level commitment, due diligence, communication and training, and monitoring and review.

Many small and medium UK businesses have never carried out a tax evasion facilitation risk assessment or documented prevention procedures, often because the offence gets confused with the separate Bribery Act 2010 “failure to prevent bribery” regime or the newer failure to prevent fraud offence under the Economic Crime and Corporate Transparency Act 2023 (which only applies to large organisations). The tax evasion facilitation offences have no size threshold and no exemption for smaller businesses, and prosecutions and HMRC civil interventions increasingly focus on introducers, umbrella companies, accountancy and bookkeeping firms, recruitment agencies and businesses using self-employed contractors or offshore suppliers — sectors where facilitation risk runs highest. Conviction carries an unlimited fine, and even a civil HMRC finding of inadequate procedures can trigger reputational damage, loss of public sector contracts, and disclosure obligations on due diligence questionnaires from banks, insurers and larger customers.

Use this free tool to check whether your business has reasonable prevention procedures in place against the Criminal Finances Act 2017’s corporate offences of failing to prevent the facilitation of tax evasion — a strict-liability law that applies to businesses of any size. Get a clear action plan in minutes.