Failure to Prevent Facilitation of Tax Evasion: A Guide for Accountants

Accountants can be prosecuted for something their staff, agents or subcontractors do. Under the Criminal Finances Act 2017, a company or partnership can commit a criminal offence if a person associated with it helps someone else evade tax, unless it had reasonable prevention procedures in place. This guide explains who is caught, what the offences say, what the defence requires and what a practice can do about it. If you are mapping this alongside your wider financial crime controls, our 2026 AML changes timeline for accountants is a useful companion.

Where this guide comes from

We read Part 3 of the Criminal Finances Act 2017 on legislation.gov.uk (sections 44 to 46) and HM Revenue & Customs' consultation draft of its guidance, published on 17 April 2016. The final guidance was issued under the Facilitation of Tax Evasion Offences (Guidance About Prevention) Regulations 2017, and we did not read the final text. This is general information, not legal advice.

Who can commit the offences

Only a "relevant body" can commit them. Section 44 defines that as a body corporate or a partnership, wherever incorporated or formed. HMRC's draft guidance states the same point: the offences cannot be committed by natural persons. An accountancy limited company or limited liability partnership is therefore directly within scope.

Who is an associated person

Section 44(4) says a person is associated with the body if they are an employee acting as an employee, an agent acting as an agent, or any other person who performs services for or on behalf of the body while acting in that capacity. Section 44(5) says whether someone provides services for the body is decided by reference to all the relevant circumstances, not just their contractual relationship. For a practice, this can reach beyond employees to subcontractors, introducers and outsourced providers.

The two offences

Section 45 covers failure to prevent facilitation of UK tax evasion. A relevant body is guilty if a person commits a UK tax evasion facilitation offence while acting as an associated person of that body. Section 45 defines a facilitation offence to include being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of a tax by another person.

Section 46 covers foreign tax evasion. It applies if a person commits a foreign tax evasion facilitation offence while acting as an associated person, and one of three links to the UK exists: the body is incorporated or formed under UK law, it carries on business or part of a business in the UK, or part of the conduct takes place in the UK.

The reasonable procedures defence

Under sections 45(2) and 46(3), it is a defence for the body to prove that, when the offence was committed, it had in place such prevention procedures as it was reasonable in all the circumstances to expect it to have, or that it was not reasonable to expect any procedures at all. Note the wording: the body has to prove this. Prevention procedures are procedures designed to prevent associated persons from committing the offences.

HMRC's draft guidance describes six guiding principles for such procedures:

• Proportionality: procedures should match the facilitation risk, given size, activities and complexity.
• Top-level commitment: senior management should endorse the stance and foster a culture where facilitation is unacceptable.
• Risk assessment: assess exposure to associated persons facilitating evasion, document it and keep it under review.
• Due diligence: apply risk-based checks to associated persons, and to clients where appropriate.
• Communication, including training: make sure policies are understood through communication and training proportionate to risk.
• Monitoring and review: monitor, review and improve the procedures where necessary.

Penalty

Sections 45(8) and 46(7) provide for a fine on conviction. The wording we read does not use the word "unlimited", so we do not state an amount here.

How this fits with AML work

The offences are separate from the money laundering regulations, but the controls overlap. A practice that already runs a firm-wide risk assessment, knows who its clients and beneficial owners are, trains its people and has a way to escalate suspicions is part of the way there. Our guide to suspicious activity reports and tipping off explains the escalation side, and our CPD courses cover financial crime training.

Practical steps (our suggestions)

• List every kind of associated person your practice uses and note which could come into contact with client tax affairs.
• Write a short risk assessment of how each could facilitate evasion, and date it.
• Have the partners or directors sign off a clear policy statement.
• Add a reporting route and a short annual training refresher.
• Review the procedures after any incident or change in services.

What we could not confirm

We read the 2016 consultation draft of the HMRC guidance, not the final version, so the wording of the principles may differ. We have not reviewed case law, any prosecutions or deferred prosecution agreements, or how HMRC applies the offences to accountancy firms in practice. The statute pages we read showed no outstanding amendments, but you should check the current text before relying on this guide.

Frequently asked questions

Can an individual sole trader commit these offences?

According to HMRC's draft guidance and section 44, only bodies corporate and partnerships can, not natural persons.

Does a foreign firm fall under the offence?

Section 46 applies if there is a UK link: UK incorporation, doing business in the UK, or conduct taking place in the UK.

Who has to prove the defence?

The body, according to the wording of sections 45(2) and 46(3).

Is a subcontractor an associated person?

It can be, if they perform services for or on behalf of the body, judged on all the relevant circumstances.

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