Since 30 September 2017, a company, LLP or partnership commits a criminal offence if someone acting for it criminally facilitates another person’s tax evasion, unless it had reasonable prevention procedures in place. For accountancy firms the risk sits squarely in client work, so the firm’s procedures need to address how a partner, employee or subcontractor could help a client cheat HMRC.

What does the offence actually say?

Part 3 of the Criminal Finances Act 2017 creates two corporate offences:

  • Section 45, the UK offence. A relevant body is guilty if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with it. “Tax” includes national insurance contributions.
  • Section 46, the foreign offence. The same idea for evasion of overseas taxes, but only where the body is UK incorporated or formed, carries on business in the UK, or part of the facilitation takes place in the UK. Proceedings in England and Wales need the consent of the Director of Public Prosecutions or the Director of the Serious Fraud Office.

Both offences came into force on 30 September 2017. Both are punishable by a fine, and the government guidance describes the penalty as an unlimited financial penalty, with possible confiscation and serious crime prevention orders.

What has to happen for the firm to be guilty?

The government guidance published under section 47 breaks the offence into three stages:

  1. Criminal evasion by the taxpayer. This means cheating the public revenue or a statutory offence of fraudulently evading tax, such as section 106A of the Taxes Management Act 1970. Non compliance that falls short of fraud is not enough. A conviction of the taxpayer is not required, but the prosecution must prove the taxpayer offence to the criminal standard.
  2. Criminal facilitation by an associated person. The associated person must deliberately and dishonestly facilitate the evasion, for example by being knowingly concerned in it or aiding and abetting it. The guidance says accidental, ignorant or even negligent facilitation does not trigger the corporate offence.
  3. Failure by the firm to prevent it. The guidance describes this as strict liability: once stages one and two are proved, the firm is guilty unless it can rely on the defence.

Unlike the Bribery Act section 7 offence, section 45 contains no requirement that the associated person intended to benefit the firm, and nothing in it requires senior management to have known what was going on.

Does it apply to my practice?

Only a “relevant body” can commit the offence, defined in section 44 as a body corporate or a partnership. The guidance is explicit that individuals cannot commit the corporate offence. So:

  • a limited company or LLP practice is in scope;
  • a general partnership is in scope;
  • a sole practitioner is not, although the sole practitioner who knowingly helps a client evade tax commits the underlying facilitation offence personally.

An associated person is an employee acting as an employee, an agent acting as an agent, or any other person performing services for or on behalf of the firm, judged on all the circumstances. Subcontracted bookkeepers, payroll bureaux working under the firm’s name, consultants and introducers can all qualify. The guidance gives a worked example of a UK accountant who knowingly acted as a conduit between a client and an overseas adviser who set up offshore structures to hide bonus income. The accountant committed a facilitation offence, and the firm he worked for would be guilty unless it had taken reasonable steps to prevent it.

What is the reasonable procedures defence?

Under section 45(2) the firm has a defence if it had such prevention procedures as it was reasonable in all the circumstances to expect, or if it was not reasonable to expect it to have any procedures at all. The second limb will rarely help an accountancy firm, because tax work is itself the risk.

The guidance sets out six principles, closely modelled on the Bribery Act guidance:

  1. Risk assessment, documented and kept under review. The guidance suggests firms “sit at the desk” of their staff and ask whether they have the motive, opportunity and means to facilitate evasion.
  2. Proportionality. Procedures need not be burdensome or address every remote risk, but must be more than lip service.
  3. Top level commitment from senior management.
  4. Due diligence on those who perform services for the firm, proportionate to the risk.
  5. Communication, including training. The guidance accepts a very small, lower risk business may rely on oral briefings.
  6. Monitoring and review, with procedures changed as risks change.

Procedures can sit within the firm’s existing anti money laundering, bribery or fraud prevention framework, provided they properly address facilitation of tax evasion. The guidance warns that simply applying old procedures tailored to a different type of risk will not necessarily be adequate.

Where are the risks in a typical practice?

  • staff under pressure from a valued client to omit cash takings or inflate expenses;
  • payroll work where staff are paid partly off the books or through sham self employment;
  • bookkeeping where personal spending is coded to the business with the bookkeeper’s knowledge;
  • introductions to offshore structures or overseas advisers;
  • remuneration or bonus schemes that reward fee growth from a client without regard to the quality of the work.

Note the line between avoidance and evasion: legitimate planning, even aggressive planning, is not the target of this offence. See tax avoidance versus tax evasion and the planning standards in PCRT.

What would reasonable procedures look like in practice?

Illustration only. A 20 person accountancy company with payroll and bookkeeping teams might:

  • add a tax evasion facilitation section to the firm wide risk assessment, covering each service line;
  • issue a short statement from the directors that the firm will not help any client evade tax, and will exit clients who insist;
  • include an express prohibition in staff contracts and subcontractor terms;
  • cover the offence in the annual AML training, with examples drawn from payroll and bookkeeping;
  • require second partner review of unusual adjustments made at a client’s request;
  • give staff a confidential route to raise concerns, and link it to the MLRO and the SAR process;
  • record an annual review of whether the procedures worked.

Who investigates and what happens on conviction?

According to the guidance, HMRC investigates the UK offence and prosecutions are brought by the Crown Prosecution Service, the Crown Office and Procurator Fiscal Service or the Public Prosecution Service for Northern Ireland. The Serious Fraud Office or National Crime Agency investigates the foreign offence. Timely self reporting is treated as an indicator that the body has reasonable procedures, and Deferred Prosecution Agreements are available. A conviction may need to be disclosed to professional regulators and can bar a body from public contracts.

What mistakes do firms make?

  • Thinking the AML policy already covers it. AML procedures focus on clients; this offence focuses on what your own people do.
  • Leaving out subcontractors and outsourced staff who perform services in the firm’s name.
  • No documented risk assessment. Without one it is hard to argue the procedures were proportionate.
  • Not linking to money laundering duties. Evaded tax is criminal property; see tax evasion and money laundering reporting.
  • Running it separately from the Bribery Act procedures and the newer failure to prevent fraud offence, which share the same structure.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.