Since 26 December 2023 a company or partnership has been criminally liable for listed economic crimes committed by a senior manager acting within the actual or apparent scope of their authority. From 29 June 2026 the Crime and Policing Act 2026 widened that rule to offences generally, so the organisation can now be convicted alongside the individual for almost any offence a senior manager commits in that capacity, with no due diligence defence.

How did companies become criminally liable before the reform?

A company cannot think or act for itself, so the criminal law needs a rule for attributing a person’s conduct and state of mind to it. The Home Office factsheet on the reform describes the old common law test, known as the identification doctrine: an offence had to be committed by the “directing mind and will” of the corporation before it could be attributed to the corporation itself. The factsheet says this test dates from 1971.

The government’s criticism was that large organisations spread decision making across many senior people, none of whom counted as the directing mind and will, so large companies were hard to convict. In a small company with one or two directors the directing mind was easy to find. The factsheet calls this an unfairness in the way the law operated.

What did the Economic Crime and Corporate Transparency Act 2023 change?

Section 196 of the Economic Crime and Corporate Transparency Act 2023 provided that if a senior manager of a body corporate or partnership, acting within the actual or apparent scope of their authority, committed a relevant offence after the section came into force, the organisation was also guilty of the offence. Section 219(3) brought section 196 and Schedule 12 into force two months after Royal Assent, and legislation.gov.uk records the commencement date as 26 December 2023.

A “relevant offence” meant an offence listed in Schedule 12, or attempting, conspiring, encouraging, assisting, aiding or abetting one. The list was aimed at economic crime and included:

  • cheating the public revenue and conspiracy to defraud;
  • theft, false accounting and false statements by company directors under the Theft Act 1968;
  • fraud and related offences under sections 1, 6, 7, 9 and 11 of the Fraud Act 2006;
  • bribery under sections 1, 2 and 6 of the Bribery Act 2010;
  • money laundering offences under sections 327 to 330 and tipping off under section 333A of the Proceeds of Crime Act 2002;
  • fraudulent trading under section 993 of the Companies Act 2006;
  • offences under regulation 86 of the Money Laundering Regulations 2017 and financial sanctions offences.

What changed on 29 June 2026?

Section 250 of the Crime and Policing Act 2026 now provides that where a senior manager of a body corporate or partnership, acting within the actual or apparent scope of their authority, commits an offence under the law of England and Wales, Scotland or Northern Ireland, the organisation also commits the offence. There is no list. Section 250(7) omits sections 196 to 198 and Schedule 12 of the 2023 Act, and section 255(3)(k) brought section 250 into force two months after the Act was passed, recorded as 29 June 2026.

When the 2023 Act was passed, the factsheet explained that the government had committed to extend the reform to all criminal offences when a suitable legislative vehicle arose. The 2026 Act is that vehicle. Unlike the 2023 wording, section 250 does not contain the words “after this section comes into force”, so for conduct that straddles the change, advisers should take criminal law advice on which version applies.

Who counts as a senior manager?

Both versions use the same definition. A senior manager is an individual who plays a significant role in:

  • making decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised; or
  • actually managing or organising the whole or a substantial part of those activities.

The factsheet says the test replicates the definition used in the Corporate Manslaughter and Corporate Homicide Act 2007 and looks at the person’s role and responsibilities, not their job title. A finance director or head of tax will usually qualify. A regional director who runs a substantial division may qualify even if they are not on the board. A junior bookkeeper will not, although their conduct may still matter under other rules such as the failure to prevent offences.

Which organisations are caught, and what about overseas conduct?

The rule applies to bodies corporate, including those incorporated outside the UK but excluding a corporation sole, and to partnerships. “Partnership” means a partnership under the Partnership Act 1890, a limited partnership registered under the Limited Partnerships Act 1907, or a similar firm formed abroad. A limited liability partnership is a body corporate, so it is caught as a body corporate. Proceedings against a partnership are brought in the partnership’s name, and any fine is paid out of partnership assets (section 250(4) and (6)).

Under section 250(2) an organisation is not liable where all the conduct took place outside the UK and the organisation would not have committed the offence had the conduct been its own. The factsheet notes that the penalty for the organisation is a fine and that for most serious crimes an unlimited fine is available.

How is this different from the failure to prevent offences?

The senior manager rule attributes the individual’s own offence to the organisation. The organisation is guilty of the same offence, and there is no statutory defence of having reasonable procedures. The failure to prevent fraud offence in section 199 of the 2023 Act and the failure to prevent the facilitation of tax evasion offences work differently: they create a separate offence for the organisation when an associated person, who can be quite junior, commits the underlying wrong, and they allow a defence of reasonable prevention procedures. A single set of facts can engage both routes.

How might it apply to a tax or accounting fraud?

Illustration only. The finance director of a manufacturing company deliberately inflates stock to hit a bank covenant and, separately, suppresses sales to understate VAT. False accounting under section 17 of the Theft Act 1968 and cheating the public revenue were both on the Schedule 12 list, so conduct after 26 December 2023 could already make the company guilty alongside the director. Since 29 June 2026 the same result follows for any offence the director commits in that role, for example a regulatory offence that requires knowledge or intent and that would previously have been hard to attribute to the company. Prosecutors can therefore pursue both the director and the company, and the company cannot escape by showing it had good controls. The distinction between avoidance and evasion becomes a corporate as well as a personal question.

What should firms and their clients do?

  • Map who is a senior manager by function, not title, including heads of divisions and anyone running finance, tax or compliance.
  • Recognise that controls and training do not provide a defence under this rule, but they reduce the chance of an offence being committed and are needed for the failure to prevent defences.
  • Remember that accountancy firms are themselves partnerships, LLPs or companies. A partner who commits a money laundering offence under the Proceeds of Crime Act while acting for the firm can make the firm liable too.
  • Do not assume small companies are unaffected. In owner managed businesses the director was usually the directing mind already; the main change is for larger, layered organisations.
  • Keep the directors’ duties framework in view: a senior manager’s offence can expose the company to a fine and the individual to separate personal liability.

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Sources

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.