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Criminal Finances Act 2017 – Commercial Agreements May Need Review and Revision

The Criminal Finances Act 2017 (the “Act”) has just come into force in the UK. The Act introduces a new corporate offence of failing to prevent the criminal facilitation of criminal tax evasion. More information on the Act, and this new offence, can be found in this briefing.

The Act will have an impact on commercial transactions. This is in consequence of the broad definition of ‘Associated Persons’.  This definition includes not just employees but third party contractors.  Therefore, a company or partnership entering into a commercial agreement will have criminal liability if the counterparty is an agent or service provider (for example, a consultant, sub-contractor or provider of outsourced services) and the company/partnership fails to take reasonable steps to prevent them assisting another person to evade tax or evading tax themselves.  The official sanction is an unlimited fine but corporates falling foul of the new offence are likely to experience knock-on regulatory, insurance and reputational issues.  Companies and partnerships will, therefore, need to amend their contracts with third party contractors to include anti-evasion facilitation terms.

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About this Author

Gillian Dennis, professional support attorney, UK
Professional Support Lawyer

Gillian Dennis is a professional support lawyer. Gillian is a qualified solicitor and practised for six years at two major law firms. Her particular specialism was intellectual property law. In 2003, she joined the College of Law as a senior lecturer with responsibility for designing and delivering commercial and intellectual property training courses for a number of city law firms.

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Andrew Wilkinson, Squire Patton, Commercial Disputes Lawyer, information technology matters Attorney

Andrew Wilkinson is a general commercial lawyer with a particular focus on information technology matters.

As a member of the firm’s Intellectual Property & Technology practice, Andrew advises both suppliers and users of hardware, software, systems integration services, managed services, cloud service arrangements and technology consultancy services in relation to technology outsourcing and general systems procurement. He counsels extensively in relation to technology research and development, intellectual property rights protection and exploitation of technology and intellectual property rights, including through strategic alliances, joint ventures and reseller and partnering arrangements. Andrew also advises UK and international businesses in a range of different sectors in relation to general commercial matters, including procurement, agency and distribution arrangements, joint ventures, dispute resolution and many other day-to-day business requirements. He regularly provides the commercial, intellectual property rights and technology advice required in mergers and acquisitions and privatisations.