News | Legal News

26 September 2017

76% of firms unaware of new tax evasion rules

Companies need to do more to protect themselves against new tax evasion laws, with three in four firms unaware of the changes coming into force this week.

According to finance website Accountancy Age, 76% of British businesses are unaware of fresh regulations that make companies liable for criminal acts committed by their employees.

Firms face unlimited fines under the Criminal Finances Act 2017 - enforceable from September 30 - even in cases where senior management were either uninvolved or unaware of facilitated tax evasion.

Any companies found in violation and prosecuted, also face reputational damage, which could impact abilities to win government contracts, or impose overseas restrictions in regulated markets.

Strict liability will be imposed for tax evasion offences, and neither intent or subjective awareness on the part of the authoritative personnel needs to be proven.

UK businesses now need to prove they have taken steps to prevent employees, agents and joint venture partners for tax evasion practises, both in the UK and overseas.

According to guidance by HM Revenue and Customs (HMRC), companies need "reasonable" policies and procedures in place, guided by six core principles, if they are to avoid liability and provide a statutory defence. These principles include:

  1. Risk assessment
  2. Proportionality of risk-based prevention procedures
  3. Top level commitment
  4. Due diligence
  5. Communication (including training)
  6.  Monitoring and review

The new laws affect and UK firm, but also any company that has a connection to Britain, including multinationals and foreign partnerships.

Alex Zachary

Alex Zachary

Tel: 01753 279022

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Phone: +44 (0) 1753 889995


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