Dust off your audit skills – tax evasion and the CFA 2017

Have you considered the scope of the Criminal Finances Act 2017 (CFA), new legislation to tackle tax evasion? From 30 September 2017, the directors of limited companies, and members of partnerships, are criminally liable for any actions of their employees, contractors and agents for any activity that is defined as tax evasion, even if they had no knowledge of that activity.

Yet again, government seem to have adopted a broad-brush approach to fix a localised problem: the boards of multi-national organisations have avoided responsibility for the tax-evasion actions of their agents and staff by pleading ignorance and the CFA has been enacted to ensure they cannot use this excuse in the future. In the process, all limited company and partnerships are now drawn into the same anti-avoidance net.

The only defense against prosecution under the CFA is to demonstrate that your business has conducted a risk assessment and put in place basic systems to counter any actions by staff, contractors and agents to engage in any activity that could be construed as tax evasion.

What should these “defenses” look like?

The CFA requires a proportionate response from every affected company and partnership, but at the very least they should be able to demonstrate that they have:

  • Conducted a risk assessment
  • Issued a prominent message to members of their business that tax evasion will not be condoned
  • Inserted terms in contracts with employees, contractors and agents, not to engage in tax evasion
  • Provided regular training for staff on preventing tax evasion
  • Clear reporting procedures for whistle-blowing
  • Regular reviews of prevention procedures

Update yourself, your staff and clients now

I have written a 6-page summary of HMRC’s 48-page guidance in this area together with an update that you could distribute to your staff and a handout you could sent to affected clients.

Advice on compliance in this area from our professional organisations is still awaited. No doubt the CFA will figure in future best practice certification along with the extended GDPR regulations.

At the very least I suggest that you read my summary, look at HMRC’s extended papers, if you have the stamina, and distribute the staff updates and client updates. You will also need to consider requests for help from clients. Time to dust off your audit skills?

Acquire and download my CFA support pack here.

Best regards,


Bob Edwards FCCA



Bob Edwards

Bob has been working with practices across the UK offering novel ways to improve cross-sales and increase new client acquisitions. He is also interested in "step changes" in legislation that offer challenges, and therefore opportunities, for practitioners to provide new recurring and one-off support services to clients.

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