Alphabet soup – CFA in your SPA?

A recent transaction acted as a timely reminder that the tax landscape is always evolving and even after a new piece of legislation comes into force, its consequences can still take time to be fully understood.

The Criminal Finances Act (CFA) received Royal Assent back in April 2017 and introduced two new criminal offences for corporates and partnerships. Broadly, both relate to failure to prevent an ‘associated person’ from facilitating UK tax evasion or an equivalent offence under foreign law. Legal tax planning or avoidance is not criminalised by the Act.

From a transactions perspective, the CFA’s impact is now making its way into the legals. We are seeing Tax covenants of SPAs requiring vendor shareholders to warrant they have been compliant. When a deal is mid-flow, a lack of compliance with the CFA, can not only delay the process at a critical juncture but potentially take value off the table.

They say prevention is better than the cure so if you are getting ready for a sale or are thinking of one in future, Grant Thornton can help ensure you are compliant with the Criminal Finances Act whilst providing you with a market leading team to advise on your disposal.