Companies and partnerships must act quickly to ensure compliance with new tax evasion measures, law firm warns

Posted by Simon Stokes on
Companies (including charitable companies) and partnerships have just a few days left to make sure they comply with strict new rules designed to combat tax evasion, leading law firm Blake Morgan has warned.

The firm fears many companies and organisations across all sectors, both commercial and not for profit, may be unprepared for, or unaware of, the Criminal Finances Act 2017, which comes into effect on September 30 and introduces new corporate offences of “failure to prevent the criminal facilitation of tax evasion”.

The Act means corporate organisations and partnerships (including foreign corporations and partnerships with a UK connection) need to have reasonable policies and procedures in place to prevent any associated person criminally facilitating the evasion of tax in the UK or abroad.

This is vital if they are to avoid liability where their associated persons knowingly or deliberately and dishonestly assist another company or individual to commit tax evasion or aid and abet another person in doing so.

The term “associated persons” includes employees, agents, joint venture partners and anyone who provides the business or organisation with a service.

Organisations prosecuted under the Act will face unlimited fines, as well as reputational damage.

Simon Stokes, a Commercial Partner at Blake Morgan, said: “Organisations should know that they will be liable under this new offence if any associated person criminally facilitates the evasion of tax while acting for them - unless the organisation can prove it had reasonable prevention procedures in place where required.

 “Having proper procedures in place that identify and mitigate tax evasion facilitation risks will significantly reduce the risk of prosecution, and ought to provide a good defence if required.

“Organisations will also need to consider whether they should provide training on the Act for relevant staff, and what measures they have in place to monitor their continued compliance with the Act.

“There is very little time left to ensure the appropriate action has been taken, so it is important to seek advice now on conducting risk assessments, drafting policies and procedures and placing relevant clauses in contracts with employees, suppliers and others associated with your business or organisation.”

Blake Morgan has issued a briefing guide on the Criminal Finances Act 2017 and its implications. This can be found here.

Blake Morgan offers a wide range of specialist advice on regulatory, commercial contract and compliance issues from its offices in London, the South Coast, Thames Valley and Wales.

About the Author

Simon is experienced in data protection including compliance, trans-border data flows, privacy policies, cookie laws, cloud services and international issues. His experience includes advising clients in the financial services sector on trans-border privacy issues including relating to the cloud and advising clients on processing data for marketing purposes. He also advises on the IP protection and licensing of data and databases.

Simon Stokes
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