The Criminal Finances Act 2017 was introduced to tackle money laundering, corruption, and tax evasion. This legislation introduced two new criminal offenses that can be committed by corporations, making them criminally liable for facilitating tax evasion by their clients, employees or associates.

This means that if a recruitment agency fails to prevent tax evasion by others, it will be held accountable for those actions. This is known as the “failure to prevent” offense. Companies will be facing custodial sentences, unlimited fines and reputational damage if found guilty of facilitating tax avoidance schemes or helping their clients evade tax.

Recruitment agencies are at risk of committing the “failure to prevent” offense if they do not have adequate procedures to prevent tax evasion by their clients or employees. The Act encourages companies to take appropriate measures to prevent tax evasion, such as developing and implementing robust policies and procedures, providing staff training, and conducting regular risk assessments.

The UK government has launched a public consultation on corporate criminal liability, which seeks to explore ways to improve the effectiveness and implementation of the “failure to prevent” offense. The purpose of this consultation is to ensure that companies can easily understand their obligations, and that they can design and implement effective prevention measures.

The consequences of not complying with the Criminal Finances Act are severe, which is why companies should take a proactive approach in preventing tax evasion. Companies that facilitate tax evasion will not only face the risk of criminal charges, but also the loss of their reputation, which can damage their business and lead to a loss of trust.

In conclusion, the Criminal Finances Act 2017 is aimed at preventing tax evasion by corporations and ensuring that companies take appropriate measures to avoid facilitating tax avoidance schemes. By setting up effective policies and procedures, adequately educating employees and associates, and conducting regular risk assessments, companies can help prevent tax evasion and avoid facing custodial sentences and unlimited fines.

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