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Freshfields Risk & Compliance

| 1 minute read

The prevention of tax evasion: now firmly on the menu

The global crackdown on tax evasion, increasing pressure from governments and the media, and new transparency measures have demonstrated a major cultural shift.

2017 will bring new a new UK law with a long global reach, part of a campaign to tackle those who assist tax fraudsters – and the corporates they work on behalf of.

Failing to prevent your staff and contractors from knowingly assisting – or knowingly turning ‘a blind eye’ to - the tax crimes committed by others will soon be a criminal offence. The offence bites on evasion of UK taxes and taxes owed to foreign governments. A company’s defence is to have in place reasonable prevention procedures.

Who will be affected?

For the UK tax offence, all companies are in scope. For the foreign tax offence, companies carrying on business - or committing any part of the criminal activity - in the UK are in scope.

What is needed and when?

As a minimum, a risk assessment and implementation plan is needed by Day 1 of the new offence - likely to be autumn 2017.

5 ways to prepare:

1) Conduct a risk assessment - What are the risks faced by different parts of your business? What prevention procedures are proportionate and reasonable? Which parts of a global group of businesses will be affected?

2) Look at your ‘associated persons’

- Those acting on your behalf, eg your staff, agents and contractors are the focus of the new offence. Where and how are they operating? What types of taxpayers are they dealing with?

3) Examine existing policies and procedures

- Which need enhancement and improvement? Where will this fit?

4) Focus on training

- What are the training needs of staff across the business?

5) Engage senior management

- What is your ‘tone from the top’ on tax evasion? What MI will those managing your business need to assess progress?

Read more on understanding and responding to the new corporate criminal offence here.