Category Archives: Tax Evasion

Criminal Finances Act coming into force 30th September

Tax evasion

On 30th September 2017, the Criminal Finances Act comes into force, as does the requirement for businesses to have reasonable procedures to prevent the facilitation of tax evasion. The law is broad and the net is wide; a business can be prosecuted if a contractor puts a client in touch with a dodgy accountant or the entire modus operandi of the business is to stash away taxable cash.

VinciWorks conducted a survey of 250 UK businesses to find out just how much tax evasion risk companies are exposing themselves to. A quarter of companies still do not have any policies in place to prevent financial crime and one in ten companies in the legal and financial services sector haven’t put in place a whistleblowing policy.
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New course – Tax Evasion: Failure to Prevent corporate version

VinciWorks has just released a new version of its tax evasion course specifically geared to the corporate sector. While the first version of Tax Evasion: Failure to Prevent is tailored for businesses in the regulated sector, the new version has been modified to better accommodate scenarios that often face companies in non-regulated industries.

Key changes

More content relevant to diverse industries

VinciWorks corporate users are based in industries as diverse as hospitality, retail and manufacturing. The corporate version of the course provides content that is more directly relevant to the kinds of issues people face in non-regulated sector industries.

Chose from six corporate scenarios

Scenarios for corporate tax evasion course

There are now six specifically corporate scenarios to choose from, with up to three included in the course. Scenarios, like everything else in the course, is fully customisable. You can upload your own scenarios or VinciWorks can help you design learning scenarios that are relevant to your company and industry.
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Criminal Finances Act – not just for accountants and lawyers

Tax evasion

The Criminal Finances Act, passed in April 2017, creates a new corporate criminal offence for failing to prevent the facilitation of tax evasion. Under the new law, if an employee or a contractor helps someone evade their taxes, that business can be prosecuted for failing to prevent it from happening.

Implementing reasonable procedures to prevent tax evasion is a key defence against prosecution, but it requires a thorough risk assessment, a top-down commitment and a roll out of staff training. Procedures should be proportional to the risks faced, so a law or accounting firm who gives tax advice to their clients will come out as having a much higher risk.
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New Course Release – Tax Evasion: Failure to Prevent

VinciWorks releases new e-learning course on tax evasion

Does your organisation have “reasonable procedures” in place for preventing the facilitation of tax evasion?

The Criminal Finances Act, passed by Parliament on 27th April 2017, creates a new corporate criminal offence for failing to prevent the facilitation of tax evasion. This places the responsibility on businesses to have “reasonable procedures” in place to ensure none of their employees or contractors are involved in helping someone evade their taxes anywhere in the world. Training on tax evasion is a requirement of the new Criminal Finances Act.

About the course

VinciWorks’ new course on tax evasion will give users an understanding of what “reasonable procedures” are and how to ensure your organisation can ensure compliance with the Criminal Finances Act. Users will also learn the difference between the terms “tax evasion”, “tax avoidance” and “tax mitigation” through interactive quizzes, relevant scenarios and case studies. The course also addresses the challenge of offshore tax jurisdictions and gives guidance on how to spot red flags. Organisations can create personalised guidance for their staff, with information about the what to do and who to contact when there is a concern of tax evasion from a client.

There are two versions of the course available, one 45 minute course for high-risk staff and a 15 minute course for all other staff. You can demo both courses below. 

Demo the 15 minute version

Demo the 45 minute version

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Criminal Finances Act – is your organisation ready?

Checklist of “reasonable procedures” to comply with the Act

On 27th April, the Criminal Finance Bill received royal assent to become the Criminal Finances Act. The Act creates a new corporate criminal offence for failing to prevent the facilitation of tax evasion, placing the responsibility on business to have “reasonable procedures” in place to ensure none of their employees are involved in helping someone evade their taxes.

Guidance from HMRC states that procedures which successfully detect and disclose wrongdoing would likely be found to be reasonable. Timely self-reporting is also an indicator that reasonable procedures are in place.

Reasonable procedures should be guided by the following principles:

1. Risk assessment

Oversight of risk assessment by senior management and appropriate allocation of resources to detect and monitor risk.

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Course on preventing facilitation of tax evasion

 VinciWorks has released a new e-learning course on tax evasion. The course will teach employees how to spot tax evaders, and the reporting procedures required of them. The training will cover the organisation’s policies and procedures, which include provisions of The Act and any other regulatory rules and principles. This includes:

  • An explanation of when and how to seek advice and report any concerns or
    suspicions of tax evasion or wider financial crime, including whistleblowing
    procedures
  • An explanation of the term ‘tax evasion’ and associated fraud
  • An explanation of an employee’s duty under the law
  • The penalties relating to the person and corporate entity for committing an
    offence under The Act
  • The social and economic effects of failing to prevent tax evasion

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New Corporate Offence in 2017 for Failing to Prevent Facilitation of Tax Evasion

Tax Evasion

The Criminal Finances Act, which received royal assent on 27th April, created a new corporate criminal offence for failing to prevent the facilitation of tax evasion.

The Act places responsibility on businesses to make sure none of their employees are involved in helping someone evade their taxes. If they do, and if the business failed to have “reasonable measures” to prevent or expose it, then the business itself could be found guilty and liable for some pretty steep fines.

This offence is broad reaching. It can be committed whether or not the company is UK-based or established under the law of another country, or whether the associated person who performs the criminal act of facilitation is in the UK or overseas.

Timeline for Implementation of The New Corporate Criminal Offence

The Act provides for commencement of the provisions from a date to be appointed by the Treasury. It is expected that this will be from September 2017, to coincide with the start of the first exchange of information under the Common Reporting Standard.

Before implementation, organisations of any size and type need to ensure that they have reasonable procedures in place.

The Six Guiding Principles of The “Reasonable Procedures” Defence

Under this new legislation, businesses can be held responsible for the actions of their employees, whether or not the business was aware of an employee’s criminal activities. A business’ only defence is to take “reasonable measures” to ensure that its employees do not facilitate tax evasion. Government guidance recommends the following six “reasonable measure” principles:

  1. Risk assessment
  2. Proportionality of risk-based prevention procedures
  3. Top level commitment
  4. Due diligence
  5. Communication (including training)
  6. Monitoring and review

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Criminal Finances Bill passes through parliament – awaits Royal Assent

The House of Lords rushed through the reporting state and third reading of the Criminal Finances Bill on 25 April and sent the bill back to the Commons to ratify a few minor amendments. The Commons quickly passed the amendments in 26 April. In introducing the bill, Baroness Williams of Trafford said:

Following the decision last week to call a general election, this is likely to be the last opportunity for the House to scrutinise this legislation. As noble Lords have said, it has had cross-party support throughout its parliamentary passage and I am very grateful to noble Lords, through the usual channels, for enabling us to take both Report and Third Reading today. Time is very short, but we all agree that this Bill will deliver valuable powers to fight money laundering, prevent the financing of terrorism and combat corruption. I hope we can maintain consensus on the way forward and return the Bill swiftly to the Commons.

The bill did in fact pass swiftly through the lords, amendments 6 to 12, 15 to 19 and 25 to 50 were agreed to, and the House of Commons will consider those amendments today (26 April). The cross-party amendment to require a register of the beneficial ownership of companies based in UK overseas territories like Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Montserrat and the Turks and Caicos Islands did not pass. The lords felt that this issue should be debated again by the next parliament.

Timeline for implementation

The Bill provides for commencement of the provisions from a date to be appointed by the Treasury. It is expected that this will be from September 2017, to coincide with the start of the first exchange of information under the Common Reporting Standard.

Before implementation, organisations of any size and type need to ensure that they have reasonable procedures in place.

Criminal Finances Bill Update – what are your reasonable procedures?

Individual being handcuffed for facilitating tax evasion

The Criminal Finances Bill, the government’s attempt to call time on the sunny shores of tax evasion, is due to pass through its final stages in the Lords at the end of April. There is some debate as to whether the bill will actually pass before parliament is dissolved. Jason Collins, a tax expert at Pinsent Masons believes that it will, while Osborne Clarke believes that it will not.

Update: the Bill received royal assent on 27th April to become the Criminal Finances Act.

If it does pass, it will come into force by the end of September 2017.

The most significant part is the new offence of corporate failure to prevent tax evasion, both in the UK and overseas.

The Bill will effectively make a business vicariously liable for the criminal acts of its employees and other persons ‘associated’ with it leading to the facilitation of tax evasion, even if the senior management of the business was not involved or aware of what was going on. This is true wherever in the world the tax is owed, and the Bill targets businesses based in the UK or abroad.
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Criminal Finances Bill: Will they or won’t they?

Will the new tax evasion offences make it through before Parliament is dissolved?

Theresa May called an election yesterday. Parliament will most likely vote to hold one today, and in less than two weeks, by 2nd May, according to the Leader of the House of Commons, Parliament will be dissolved and the country will head towards polling day on 8th June.

It’s taken everyone by surprise, not least those of us in the compliance space who were carefully preparing for the Criminal Finances Bill and the introduction of two new offences to tackle tax evasion.

The Criminal FInances Bill had already worked its way through most parliamentary stages. It was due to be considered by the Lords at report stage on 25th April, prior to its third reading in the Lords, scheduled for the 3rd and 8th of May, and then Royal Assent sometime after that. The least we know is that timetable has gone out the window.
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