New corporate offence in the Criminal Finances Act 2017 tightens duty of care for companies to fight tax evasion – also effects German companies

On 30th of September 2017 a new corporate offence came into force under Part 3 of the Criminal Finances Act 2017 (“CFA”) that makes it easier to hold domestic and foreign companies to account with regard to tax offences. If a company has failed to take reasonable steps to prevent an agent who acts on their behalf from facilitating tax evasion, the action of the agent can now be attributed to the company (see Part 3, Section 45 (1) - (3) CFA). Previously it was the public prosecutor’s responsibility to prove that the tax evasion was also known about at management level and that they intentionally tolerated it. Board members of global companies in particular could therefore not be held accountable because it was not possible to prove knowledge of these dishonest practices due to decentralised management and not every decision being penned by board members.

The new corporate offence applies to UK and non-UK companies (Part 3, Sections 45-46 CFA) provided that their trade has an effect on the English market or their activities or omissions demonstrate a connection with England and/or Wales.  The new offence is based on the assumption by the British Government that every company has extensive knowledge of foreign tax laws. Again, "ignorance is no defence" in this case.

Advice on issuing invoices and carrying cash

Special attention must be paid when issuing invoices in cross-border transactions. The demands regarding information that must be contained in the invoices are much higher in some countries than in Great Britain.

Especially when trading with several dealers, if the demands are not adhered to, one can easily be accused of MTIC (missing trader intra-community) fraud.

One must be extremely careful when carrying cash into the country. Apparently sniffer dogs are used in English airports to find cash.  The limit is 10,000 euros.  Money is excess of this must be declared. But one should exercise caution here, too, as the declaration may lead to further unpleasant questioning.