Failure to Prevent Tax Fraud Facilitation: How Robust Is Your CCO Defence?
Introduction
The Criminal Finances Act 2017 introduced a Corporate Criminal Offence (CCO) in the UK for businesses found guilty of failing to prevent the facilitation of tax evasion. This legislation has been in force since September 2017.
In August 2025, HMRC secured a key charging decision, the first of its kind under the CCO legislation, against a UK accountancy firm. On August 7, 2025, the UK accountancy firm and six of its representatives appeared in Manchester Crown Court facing of not preventing the facilitation of tax evasion and related offences, involving Research and Development (R&D) tax credits and Covid-19 bounce-back loans.
This development, alongside the recently introduced ‘failure to prevent fraud’ offence under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) for larger businesses, is bringing CCO back into focus.
What Is the CCO Legislation?
The CCO legislation applies to all businesses irrespective of their size. What the legislation means is that if an “associated person” of a business (broadly speaking, any person or third party who is performing services for or on behalf of that business) facilitates tax evasion by a third party and the business has failed to prevent said facilitation, then it can be found guilty of a criminal offence under CCO. Its application is broad and can apply to tax evasion carried out both in the UK and overseas.
CCO is a strict liability offence and therefore knowledge and awareness of the facilitation by Senior Management is not necessary for the business to be found guilty of a criminal offence. Businesses therefore must be able to demonstrate that they have reasonable prevention procedures in place to preclude such facilitation from occurring. This is the only defence against a CCO charge.
Any business that is found guilty of an offence under the CCO legislation can face unlimited fines, significant reputational damage and possible exclusion from the ability to bid for public contracts.
As noted above, the only defence against the CCO legislation is to have ‘reasonable prevention procedures’ in place. HMRC outlined six guiding principles which provide a framework for what they expect businesses to have in place, these are:
- Risk assessment
- Proportionality of risk-based prevention procedures
- Top level commitment
- Due diligence
- Communication (including training)
- Monitoring and review
A businesses’ response to the CCO legislation should be considered and proportionate to the risk it faces of persons associated with it committing tax evasion facilitation offences. However, simply undertaking a high-level risk assessment and leaving this ‘sat on file’ is equally not appropriate.
With the legislation now eight years old HMRC are unlikely to be sympathetic to businesses who cannot demonstrate that they have put those reasonable defence procedures in place, whether in the course of an HMRC investigation or as part of a Business Risk Review. Ignorance of the CCO is not a recommended approach for business owners.
Conclusion
The charging decision secured by HMRC is clearly a significant moment, with allegations from critics that CCO was nothing more than a paper threat now disproven. While the provisional trial date is not until September 2027, and we will have to wait until then to see how the Court finds, HMRC action here alongside the introduction of the wider Failure to Prevent Fraud legislation, means it is now more important than ever that businesses take the CCO offences risk seriously and ensure that they have suitably robust and up-to-date defence processes in place.
Moreover, businesses which are subject to due diligence during transactions, are required to comment on their response to the CCO legislation, and we anticipate will increasingly need to have dealt with this in advance of deal completion.
How Can A&M Tax Help
At A&M, our Tax Risk and Dispute Management specialists have extensive experience of supporting businesses in building their CCO defence. Our approach ensures that all six areas of the guiding principles of defence are covered, to reduce exposure under the Criminal Finance Act. We are also able to support a combined CCO/ECCTA approach.
