Anti-Money Laundry Act 2010

Economic Reforms Act

Finance Act 2018
Auditors Reporting Regulations 2018
Income Tax Ordinance 2001

On the 27th April 2017, the Criminal Finances Act (“the Act”) received royal assent. Of
particular interest to all law firms, however, is the fact that the Act has also created new offences
in relation to the facilitation of tax evasion which will affect all companies, LLPs and
partnerships – and thus professional advisers such as lawyers and accountants. The result of the
introduction of the new offence is that companies, LLPs and partnerships can now be held to
account for the actions of their employees in relation to failure to prevent facilitation of tax
evasion – not only in relation to UK tax but also in relation to foreign tax evasion offences.
Underthe Act, liability only arises on a corporate basis for the organizations in relation to the acts
of “associated persons” of the organisation. However, the company, LLP or partnership will be
criminally liable if it has failed to prevent tax evasion – whether by a member of staff or its agent
and whether or not the company, LLP or partnership was involved or even aware of the evasion
in question.
It is inevitable that the majority of firms strive, in any event, to avoid providing advice which is
of its nature illegal – if only because Principle 1 of the SRA Handbook imposes an underlying
duty upon all firms to uphold the rule of law and the proper administration of justice.
For the offence to arise there must be a “relevant body” which is defined at s.44(2) of the Act as
being “a body corporate or partnership (wherever incorporated or formed)”. The implication,
therefore, is that it would not apply to an unincorporated sole practitioner – but then if there were
an act of unlawful tax evasion an individual would be liable in any event. The duty which is
placed upon the relevant body is to put in place “such prevention procedures as it was reasonable
in all the circumstances” to prevent the criminal acts of its employees and other persons who are
associated with it, even if the members of senior management are not involved in or aware of
what was going on.
The stages of the offence are:

 the criminal evasion of tax, regardless of whether there has been a conviction;

 the criminal facilitation of this offence by an associated person;

 which the firm failed to prevent through the adoption of suitable procedures.
S.44 of the Act provides that a person is associated with a relevant body if they are:

 an employee acting in the capacity of an employee of the relevant body,

 an agent, other than an employee, acting in the capacity of an agent of the relevant body,
or

 any other person who performs services for or on behalf of the relevant body who is
acting in the capacity of a person performing such services.

One consequence of the Act is that solicitors, accountants, tax advisers, and insolvency
practitioners who suspect (as a consequence of information received in the course of their
work) that their clients (or others) have engaged in tax evasion or other criminal conduct that
produced a benefit, now must report their suspicions to the authorities (since these entail
suspicions of money laundering). In most circumstances it would be an offence, "tipping-
off", for the reporter to inform the subject of his report that a report has been made.[88]These
provisions do not however require disclosure to the authorities of information received by
certain professionals in privileged circumstances or where the information is subject to legal
professional privilege. Others that are subject to these regulations include financial
institutions, credit institutions, estate agents (which includes chartered surveyors), trust and
company service providers, high value dealers (who accept cash equivalent to €15,000 or
more for goods sold), and casinos.