Corporate Criminal Offences: a guide to preparing a defence

05 November 2020

The Corporate Criminal Offences, enacted as Sections 45 and 46 of the Criminal Finances Act 2017, addressed the perceived gap in the law that made it difficult to hold a corporation to account when its representatives committed the criminal offence of facilitating tax evasion.

Further insight how the BDO Tax Risk team can support you, are found below:

Corporate Criminal Offences in COVID-19: HMRC guest speaker and insights

Here you hear practical advice and guidance on the Corporate Criminal Offences legislation within the context of Covid-19 and remote working. Our panel of speakers are from BDOs leading Tax Risk Team and we have an exciting guest speaker Samuel Dean, HMRC Lead for CCO.

Watch the webinar now


Who and what is affected?

It applies to all taxes, and is relevant to all businesses (namely, corporate bodies and partnerships) whatever their size or industry sector.

This UK tax evasion offence applies to businesses worldwide and is applicable to any business with certain UK connections.

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What does the Criminal Finances Act 2017 entail?

In summary, the legislation means that if an “associated person” of a business does criminally facilitate tax evasion, and the business is unable to demonstrate that it had reasonable procedures in place to prevent such facilitation, the business is guilty of a criminal offence. The consequences of a prosecution include unlimited fines, reputational damage and the likelihood of regulatory sanction.

The Domestic offence

  • Requires evasion of tax in the UK
  • Relevant to any corporate, wherever based or incorporated, providing services to UK taxpayers or with UK supply chain.

The Foreign offence

  • Requires evasion of tax anywhere in the world
  • Relevant to any corporate (whether incorporated in the UK or not) carrying out a business or part of a business in the UK, or if the Criminal Act of facilitation of tax evasion occurred in the UK.

In line with HMRC Guidance, first carry out a documented risk assessment, the purpose of which is to highlight potential risk areas and develop an Implementation Plan where remedial actions may be required. Next steps typically include roll out of CCO policies, procedures, communication internally and externally (e.g., with suppliers and other ‘associated persons’), implementing new processes as needed, and training.

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Communication and training

Communication and Training is one of the key Six Guiding Principles in establishing a defence from prosecution as set out in HMRC’s CCO guidance.

Our CCO eLearning course is designed to educate members of your staff on the legislation and support your procedures in preventing the facilitation of tax evasion.

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How can BDO Tax Risk team support you?

All businesses continue to develop their response both to COVID-19 and also an evolving working environment post COVID-19. The challenges, and opportunities, of a remote workforce and the accelerating pace of digital change mean that different approaches to compliance, governance and regulation must be considered. 

It is important to ensure your reasonable prevention procedures are designed to prevent associated persons from commuting the facilitation offences in the new reality. 

This Toolkit provides your organisation with the tools, templates and knowhow to develop a response to the Corporate Criminal Offence legislation.

It is a step by step guide to ensuring that the controls you implement are aligned to HMRC’s Six Guiding Principles and meet the legislations requirements, including carrying out your own CCO Risk Assessment. The documentation includes various policies, internal and external messaging and example contractual terms.

Ensuring your staff and other associated persons understand their responsibilities is a critical control in minimising the risk of enforcement action. We have developed a bespoke elearning course to meet HMRC’s requirements.

The elearning module can be easily uploaded to your existing Learning Management System for staff distribution, or we can provide a platform through which you can distribute the training. This method of learning and embedding is well suited to remote working.

  • Risk assessments and ongoing monitoring

Where there are staff reductions, employees working from home, or management focused on critical functions only, unique opportunities arise for committing tax fraud. Risk assessments should be regularly reviewed, particularly within the context of COVID-19.

For businesses who have already performed a risk assessment, we can support with carrying out a review, which normally involves reviewing your existing policies and procedures as well as refreshing your current risk assessment to reflect any changes in the business.

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