Small businesses urged to prepare for imminent tax evasion legislation
Small UK business owners have just days to’start complyingwith strict new rules designed to combat tax evasion, with leading law firmsoutlining where preparations should begin.
On 30 September, the Criminal Finances Act 2017 will be enacted to give HMRC powers to pursue possible facilitation of tax evasion anywhere in the world, if it involves a UK tax liability.
The act will create new corporate offences for the failure to prevent the criminal facilitation of tax evasion? by a third party acting for a business.
Read more: HMRC targets small businesses in tax avoidance crackdown
According to legal firm Blake Morgan, the term associated persons? refers to employees, agents and joint venture partners, as well as anybody providing the business with a service.
Business owners convicted under the act will face unlimited fines as well as the reputational damage of a corporate offence, Blake Morgan has warned.
To protect themselves, business owners have been advised to identify each area of risk, and consider steps to mitigate the facilitation of tax evasion.
Outlining the importance of the act, Simon Stokes, a 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.”
Under the legislation, businesses are required to perform active risk assessments, rather than issuing a statement clearing it of responsibility.
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, Stokes added.
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.