For many businesses, the coming into force on 30 September 2017 of a new criminal offence of failing to prevent the facilitation of tax evasion, may have passed without much attention, being consigned to the “not something that we need to worry about” pile of red tape. It is surprising that a piece of legislation that is similar in many ways to the much publicised and discussed Bribery Act and opens up an organisation to criminal penalties, has, in many ways, been so overlooked.
The new legislation stems from the Government’s frustration in holding businesses responsible for failing to prevent their employees or agents from criminally facilitating tax evasion. There was concern that organisations were turning a deliberate blind eye to criminal acts of their workforce in order to try and shield themselves from criminal liability. To address this concern, the new legislation creates two new criminal offences of corporate failure to prevent the facilitation of tax offences.
Either of the new offences is committed where a relevant body fails to prevent a person associated with it from facilitating tax evasion. For these purposes “associated with” has wide meaning covering not only employees but also agents and any person who performs services for or on behalf of the business.
The statutory defence, which is the only defence available, is that the business had in place such prevention procedures as it was reasonable in all the circumstances to expect it to have, or that it was not reasonable in all the circumstances to expect it to have any prevention procedures in place.
It should mean that businesses are no longer able to turn a blind eye to it, if they think that that their workforce is facilitating criminal tax evasion. With conviction resulting in a criminal sanction, an unlimited fine and no doubt real damage to reputation, businesses across all sectors should be making sure they are putting steps in place so they can take advantage of the statutory defence.
HMRC has produced a useful guidance note which sets out six guiding principles for businesses that want to understand the types of processes and procedures that can be put in place to avoid the new criminal sanctions. These guiding principles are: risk assessment; proportionality of risk-based prevention procedures; top level commitment; due diligence; communication (including training); and monitoring and review.
At the very least we would expect many businesses to look to put in place an appropriate policy and provide regular training to staff as a minimum.
If you would like any further information or your organisation needs assistance in putting together a relevant policy and training programme please contact Matt Jenkin on 01628 470011 or firstname.lastname@example.org.