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New Corporate criminal offence of failure to prevent the facilitation of tax evasion comes into force on 30th September

Gareth Bevan 27 September 2017 No comments

From 30 September 2017 it will be a criminal offence in the UK if a business fails to prevent its employees or any associated person from criminally facilitating tax evasion.

An offence will be committed under the Criminal Finances Act 2017 whether the tax is evaded in the UK or a foreign country.

Our earlier blog post gave an overview of the new crime and action businesses needed to take ahead of the new law coming into force.

Risk assessment

The key requirement is to ensure that reasonable prevention procedures are in place.  All businesses need to be able to demonstrate that they have undertaken an assessment of the risks of tax evasion being facilitated, and have implemented a plan to introduce new controls where gaps are identified.

HMRC’s finalised guidance states that this risk assessment should be documented and kept under review.

Consequences of a conviction

A conviction is likely to have serious implications for any business in terms of heavy financial penalties, damage to reputation and potential loss of future public contracts.

Who is most at risk of conviction?

Certain business sectors such as financial services, accounting and legal are most at risk under the new legislation. However, all businesses sectors are affected and need to take action to comply with the new requirements.

In particular businesses that conduct cross-border trade, employ casual labour and contractors, or transact in goods and services liable to MTIC fraud, are also at significant risk.

What businesses need to do

To minimise the risk of investigation and prosecution under the new legislation businesses should:

  • familiarise themselves with HMRC’s guidance on the offence which includes suggestions for the types of prevention processes and procedures that can be put in place
  • consult any best practice guidance issued by relevant industry bodies
  • secure top level commitment from their board and senior management about the importance of complying with the new legislation
  • ensure a risk assessment has been carried out and documented, and that an implementation plan for the introduction of any new prevention controls and procedures required is being actioned
  • ensure staff are sufficiently training on tax evasion and the new offence, and that details of the company prevention policies and procedures are communicated throughout the business
  • monitor and regularly review the prevention procedures to ensure they are updated and improved as new risks are identified.

If you need further information or require assistance in assessing whether you business is complying with the new legislation please get in touch.