After 8 years, the UK is prosecuting its first FAILURE TO PREVENT (FTP) TAX EVASION

It was reported on Thursday, 14 August 2025, that HMRC has initiated its first corporate prosecution for the 'failure to prevent the facilitation of tax evasion' offence introduced by s.45 Criminal Finances Act 2017 (the 2017 Act).

The charges relate to Research and Development repayment fraud. The case involves alleged fraudulent claims over £16 million of:

• Research and Development Tax Credits and
• Covid-era Bounce Back loans.

In the Crown Court in Manchester yesterday:-

• Bennett Verby Ltd, and
• The other six defendants, who were all present in court yesterday and have been bailed, are
• Mohammed Bashir,
• Adam Greenwood,
• Neil Jones,
• Zachary Rothwell,
• Josh Rothwell and
• Geoffrey Rowlinson.

The firm said the charges are denied and will be 'vigorously defended'.

The case is not expected to come to trial until September 2027.

The development is a significant shift in HMRC's enforcement approach, commented law firm Reynolds Porter Chamberlain (RPC).

The new strict liability offence came into effect eight years ago, and there have been no previous prosecutions, although in December 2024, HMRC said

• It had 11 live investigations and
• 28 additional 'opportunities' under review.
• https://www.gov.uk/government/publications/number-of-live-corporate-criminal-offences-investigations/number-of-live-corporate-criminal-offences-investigations

It has always emphasised that the law is intended to encourage improvements in corporate behaviour as well as to get convictions.

HMRC said.

• 'This is not about simply increasing the number of corporate prosecutions but changing industry practice and attitudes towards risk, encouraging organisations to do more to prevent tax crime happening in the first place',

Organisations found guilty of the offences can be penalised with potentially unlimited fines.

The 2017 Act also includes a further offence of failure to prevent the facilitation of foreign tax evasion with a UK nexus.

Both offences apply to companies, other bodies corporate and partnerships. There is no need to prove

• Intent or
• Awareness by senior management.

The legislation imposes strict liability where an associated person, for example,

• An employee, agent or contractor, criminally facilitates tax evasion and
• The organisation has failed to implement reasonable procedures to prevent that facilitation.

The offences were modelled on similar wording in the Bribery Act 2010.

However, enforcement has proven challenging. According to law firm Hogan Lovells, the reasons for this include

• Evidential complexity, as prosecutors must prove criminal tax evasion and its criminal facilitation, as well as address the corporate failure to prevent the facilitation.
• Moreover, companies and professional services firms are often well-resourced and can be expected to defend charges robustly, making prosecutions lengthy and costly.
• Also, HMRC has always preferred civil enforcement, focusing on recovering revenue via civil routes rather than pursuing criminal enforcement.

Hogan Lovells said

• 'Any organisation with UK operations, particularly in accountancy, law, financial services or tax advisory, should view this case as a clear signal to revisit their prevention procedures',
• Firms should also improve training and oversight, document and evidence their compliance, and align the prevention of 'tax evasion facilitation' with broader economic crime efforts, including anti-bribery and anti-fraud controls, it said.
• 'With this first prosecution now live, businesses can no longer assume the offence is dormant',  

Reynolds Porter Chamberlain (RPC) said

• 'Implementing reasonable procedures, as outlined in HMRC's guidance, can serve as a defence against liability',
• The key defence is supplied in s.45(2) of the 2017 Act:
• 'It is a defence for B to prove that, when the UK tax evasion facilitation offence was committed, (a) B had in place such prevention procedures as it was reasonable in all the circumstances to expect B to have in place, or (b) it was not reasonable in all the circumstances to expect B to have any prevention procedures in place.'

Sources

• RPC Legal https://www.rpclegal.com/thinking/tax-take/hmrc-initiates-first-corporate-prosecution-under-failure-to-prevent-tax-evasion-laws/
• Hogan Lovells https://www.hoganlovells.com/en/publications/hmrc-brings-first-prosecution-under-failure-to-prevent-facilitation-of-tax-evasion-laws
• The Business Desk https://www.thebusinessdesk.com/northwest/news/2156823-trial-date-set-for-bennett-verby-tax-avoidance-case....in-2027
• HMRC (December 2024) https://www.gov.uk/government/publications/number-of-live-corporate-criminal-offences-investigations/number-of-live-corporate-criminal-offences-investigations