Tax evasion facilitation prevention

From 30 September 2017, if someone in your firm facilitates tax evasion and you don’t have reasonable prevention procedures, you could be faced with unlimited fines, not to mention reputational damage.

The Criminal Finances Act 2017 introduces a new corporate failure-to-prevent offence relating to the facilitation of tax evasion. This is supported by HMRC guidance, centering around six core principles that should inform your prevention procedures. It’s all very reminiscent of the Bribery Act regime but with subtle differences just to keep you on your toes, eg ‘adequate’ prevention procedures becomes ‘such prevention procedures as was reasonable in all the circumstances to expect’.

It’s not just your employees you need to worry about. You’ll also be liable for tax evasion facilitation committed on your behalf by an agent or intermediary, so you’ll have to factor this into existing due diligence arrangements. You’ll probably also want suitable contract clauses with your suppliers.

Don’t assume this new offence is only relevant to tax advisers and financial institutions. You may think your firm doesn’t need prevention procedures, but HMRC guidance makes it clear that you’re expected to conduct a formal risk assessment before reaching this conclusion and be able to justify your reasoning.

Getting prepared

To help you prepare for this new offence, we’ve produced a raft of practical guidance, tools and precedents within LexisPSL Practice Compliance, our unique online toolkit designed to help law firms meet their own compliance obligations. We attach an extract of our ‘Tax evasion facilitation prevention compliance checklist’ which pulls together the requirements in the Criminal Finances Act 2017 and HMRC guidance.

Click here to open the checklist

Find out more

If you’d like to find out more about how we can help you to get ready for this new offence, or if you would be interested in exploring how LexisPSL Practice Compliance could help you manage risk and compliance in your firm, contact your account manager or call 0330 161 1234 and we will direct you to the right contact. For further information online, visit our information page.

Filed Under: Practice of Law

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