Criminal Finances Act 2017 - Global reach: Are you ready for 30th September 2017?

The Criminal Finances Act 2017 has a global reach and its clear many organisations are not yet ready to respond to this legislation despite the serious consequences if they don't.

It requires organisations to have reasonable procedures in place to prevent tax evasion and holds the organisation libel for the actions of individuals acting on its behalf such as staff and contractors.

Any organisation therefore that has either has a business in the UK, has people acting on its behalf in the UK or transacts with UK-based individuals can be at risk of falling foul of the new requirements.

The legislation applies to:

• tax evasion of any tax, anywhere in the world.
• facilitation which could be undertaken anywhere in the world. 

  What are the penalties?

 The penalties for an organisation if someone acting on their behalf commits an offence of aiding or abetting someone to evade tax can include:

• criminal conviction
• an unlimited fine
• confiscation orders or serious crime prevention orders

The penalties imposed could be of a similar level to those under the UK Bribery Act 2010, so they could be significant and cause reputational damage.

 Act now

HMRC would expect organisations to have already started work their procedures and to keep matters under regular review. Have you identified, documented and categorised the specific risks of facilitation of tax evasion across your organisation?  Are you working on having actions in place to manage those risks and devised a plan to address any shortcomings?

What are ‘reasonable procedures’?

HMRC recommends that organisations should put in place procedures that are proportionate to the risks they face, using HMRC’s six principles as a guide:

• Risk assessment
• Proportionality of risk-based prevention procedures
• Top level commitment
• Due diligence
• Communication
• Monitoring and review

  For further information see:

• Tackling tax evasion: Government guidance for the corporate offences of failure to prevent the criminal facilitation of tax evasion is here.
• The Facilitation of Tax Evasion Offences (Guidance About Prevention) Regulations 2017 are here.

For further information see:

• Tackling tax evasion: Government guidance for the corporate offences of failure to prevent the criminal facilitation of tax evasion is here.
• The Facilitation of Tax Evasion Offences (Guidance About Prevention) Regulations 2017 are here.