More compliance needed from companies with the new Criminal Finances Act!

September 7, 2017

The Criminal Finances Act will come into force on 30th of September 2017. Under the Act, your business could be criminally liable for the actions of your employees. The Act requires businesses to have “reasonable procedures” in place to ensure that employees are not helping someone evade their taxes, wherever in the world it is owed.

 

Companies at risk

All companies are at risk. Facilitating tax evasion is not just the risk of tax advisors, accountants and lawyers. Failure to pay or collect VAT, payment of false invoices to suppliers or cash transactions without receipts can all result in criminal proceedings.

 

What should you do?

Government guidance recommends 6 principles for applying “reasonable procedures”:

1. RISK ASSESSMENT

Conduct an assessment of the risk that an employee could actually facilitate tax evasion. Companies that handle large sums of cash or facilitate large transactions might inadvertently serve as conduits for money laundering or tax evasion.

A methodical assessment of the nature and extent of your exposure to the new criminal offence will be the cornerstone of any "reasonable procedures" defence.

2. RISK-BASED PREVENTION PROCEDURES

Document policies and procedures and allocate resources that are proportionate to your risk profile.

3. TOP-LEVEL COMMITMENT

Top-level management should foster a culture within the organisation in which activity intended to facilitate tax evasion is never acceptable.

4. DUE DILIGENCE

Take an appropriate and risk-based approach to check the working procedures of anyone who performs services on behalf of the organisation that may put you at risk. Organisations may choose to conduct their due diligence internally or externally.

5. TRAINING AND COMMUNICATION

Ensure that all staff understand how offences can be committed, the consequences of non-compliance and how to respond to risks and red flags.

6. MONITORING AND REVIEW

Ensure a framework is in place to monitor and review prevention procedures and make improvements where necessary over time.

 

 

 

 

 

 

 

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