Eight years after the UK parliament armed HMRC with corporate ‘failure to prevent the facilitation of tax evasion’ powers, the agency has finally pulled the trigger. Bennett Verby, a Stockport-based accountancy practice, has been charged under the Criminal Finances Act 2017 in connection with an alleged R&D tax credits repayment fraud.
The first ever criminal prosecution of a business under this legislation is now underway and, significantly, the defendant is not a shadowy offshore entity but a mainstream accountancy firm. Six individuals, including a former director, face charges ranging from cheating the public revenue to money laundering. The case is scheduled to come to trial in September 2027.
HMRC is signalling its willingness to prosecute professional advisers
Following years of criticism for leaving these offences dormant, HMRC is now signalling its willingness to prosecute professional advisers. This marks a decisive moment for accountants, to whom the message is unambiguous: compliance systems can no longer be an afterthought.
Statutory framework
Part 3 of the Criminal Finances Act 2017 created two strict liability offences. Section 45 deals with failure to prevent the facilitation of UK tax evasion, and section 46 with failure to prevent the facilitation of foreign tax evasion (with a UK nexus).
These provisions apply to companies, partnerships and other bodies. If an associated person (employee, contractor or agent) facilitates tax evasion and the organisation lacks ‘reasonable prevention procedures’, then the business itself is criminally liable, regardless of whether senior management knew about or intended the evasion.
The sole defence is to prove that reasonable procedures were in place, or that they could not reasonably be expected to have been in place. Conviction exposes businesses to unlimited fines and reputational fallout. Modelled on the Bribery Act 2010, this regime reflects a shift from detection to prevention as the benchmark of corporate accountability.
Broader enforcement
This prosecution does not exist in isolation. HMRC is simultaneously intensifying its scrutiny of high net worth individuals, cross-border structures and perceived abuse of reliefs such as R&D tax credits (which are at the heart of the Bennett Verby case).
The agency has set itself a target of increasing tax-related criminal prosecutions by 20% over the next five years. In support of this, the government pledged an extra £100m earlier this year for 500 more compliance staff, adding to the 5,000 positions already announced in the 2024 Autumn Budget. Accountants, tax advisers and legal professionals are firmly within its sights, whether as defendants themselves or through client-related exposure.
Test case
It is through this lens that the Bennett Verby case must be viewed. Until now, sceptics dismissed the ‘failure to prevent’ offences as toothless. As of late 2024, HMRC had 11 live investigations and 28 further ‘opportunities’ under review, but no charges had reached the courts. More than 100 potential cases had been reportedly examined before being dropped or pursued through civil channels.
Barriers to enforcement are significant. Prosecutors must establish not just the underlying evasion but also its facilitation and the corporate failure to prevent it – a complex evidential chain. The defending businesses are typically well resourced, making prosecutions expensive and protracted. HMRC has also historically favoured civil penalties and tax recovery over criminal litigation.
The law is operational, and no firm is too small to be scrutinised
The Bennett Verby case suggests a recalibration. By prosecuting a mid-sized practice, HMRC can demonstrate that the law is operational and that no firm is too small to be scrutinised. The case also deals with the claims of HMRC’s critics that the ‘failure to prevent’ offences are merely symbolic.
A conviction would also strengthen HMRC’s hand in pursuing larger, higher-profile firms. By focusing on R&D tax credits, HMRC also underscores its determination to enforce in areas of systemic risk.
Implications for firms
For practitioners, the implications are immediate and practical. To ensure they do not fall foul of these offences, a number of strategies can be implemented.
A good first step would be to revisit compliance frameworks, ensuring prevention procedures reflect evolving risk areas, such as R&D claims and cross-border structuring. Oversight of client work should also be strengthened: high-risk engagements require heightened review, particularly where third parties are involved.
Paper trails may become a firm’s strongest defence
It is also crucial to maintain rigorous documentation of these processes. Policies, training and monitoring need to be demonstrable, as paper trails may become a firm’s strongest defence. Finally, training must be embedded at all levels. Staff and contractors must understand where legitimate planning ends and facilitation begins.
Immediate risk
The Bennett Verby prosecution transforms ‘failure to prevent’ offences from a theoretical risk into a tangible threat. Whether the case proves to be the first of many or an isolated test will depend on HMRC’s appetite and resources. But the direction of travel is clear: firms that fail to embed credible prevention procedures expose themselves to criminal liability, unlimited fines and reputational harm.
For accountants, ‘reasonable procedures’ are no longer a compliance aspiration – they are the only viable defence.
