The Criminal Finances Act 2017 received Royal Assent in April of this year and in September, the Corporate Criminal Offence of failing to prevent the facilitation of tax evasion came into effect.
The rules concerning Corporate Criminal Offences, or CCOs, apply to all partnerships and bodies corporate. This includes companies limited by guarantee - a structure that many charities adopt - and, I assume, charitable incorporated organisations.
The offence of failing to prevent the facilitation of tax evasion occurs where a person acting on behalf of a charity that is a body corporate (such as a charitable company limited by guarantee) knowingly facilitates tax evasion and the charity fails to prevent the offence being committed.
Where the offence is committed, the charity will be liable for corporate prosecution and unlimited penalties unless it had reasonable procedures in place at the time of the offence to prevent the offence being committed, or it was unreasonable to have such procedures.
The legislation itself may not have been aimed specifically at charities but similarly to the rules concerning "persons with significant control" that appeared a couple of years ago, charities are caught and charity trustees should be aware of and considering what further actions are required in order to ensure that the necessary protections are in place.
What constitutes "reasonable procedures" is the subject of helpful HMRC guidance. As an absolute minimum, charity trustees should undertake a risk assessment to determine the extent to which the charity is at risk in this area but for larger charities in particular, with multiple income streams, it is strongly recommended that time is taken to consider the new rules and the impact that they will have on the charity.
Policies may ultimately be required and robust controls implemented to protect the charity and its trustees.
A Bill to amend the Proceeds of Crime Act 2002; make provision in connection with terrorist property; create corporate offences for cases where a person associated with a body corporate or partnership facilitates the commission by another person of a tax evasion offence; and for connected purposes.