21st September 2017
On 30 September 2017, a new corporate criminal offence of failure to prevent facilitation of tax evasion (whether in the UK or overseas) comes into force. This new offence under the Criminal Finance Act 2017 has been modelled on the anti-bribery legislation. Unless companies and partnerships (whether UK based or foreign businesses with a UK office) can show that they had put in place reasonable “prevention procedures”, they may be held liable for the acts of their staff, agents or other individuals associated with them.
It is therefore essential to put effective anti-evasion policies and systems in place as soon as possible. The Government has published guidance referring to six principles which will be very familiar to those who have been involved in setting up and maintaining anti-bribery procedures. As you might expect, the first principle is that of risk assessment, leading on to the implementation of proportionate risk-based prevention procedures. All parts of a business should therefore assess the potential risks of being involved in the criminal offence of tax evasion. Once this has been done, the detail and extent of the relevant prevention procedure should be proportionate to the level of risk established.
The other four principles are top level commitment, due diligence, communication (including training), and monitoring and review.
When assessing the potential risks, there are a number of obvious areas of concern in the area of human resources, some of which we encounter on a reasonably regular basis. These include:
At Mundays, we have already put a new Tax Evasion Facilitation Prevention Policy in place and all our staff will be required to attend an online training course. The issue will also be discussed at departmental meetings.
As with anti-bribery and data protection, a breach of the legislation won’t just result in potential fines, but could cause significant reputational damage to your organisation. It may not happen to you, but can you afford to take that risk?
The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2017.
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