Criminal Finances Act now in force – what are the next steps?

Tax evasion prison sentence

What you need to do now to prevent facilitation of tax evasion

From today, 30th September 2017, the new Criminal Finances Act is in full legal force. The race is now on for all companies to ensure they have duly considered what reasonable procedures they have in place to prevent corporate facilitation of tax evasion.

If you haven’t done anything yet, don’t worry. It’s not too late, but it’s vital to start working now to ensure your business has a legal defence should the worst happen. Just like the age old saying that your first payment of every month should be to the insurance company, the first task on Monday’s agenda should be to figure out what your company needs to do to prevent tax evasion.

Read more: VinciWorks survey reveals staff at 1 in 4 companies unaware of financial crime policies

If you haven’t started preparing yet…

  • Don’t panic, but get started on a thorough plan of action.
  • Form an implementation team that includes senior management involvement.
  • Adopt VinciWorks’ free tax evasion policy template and communicate this to all staff.
  • Ensure all contractors and third parties are aware of your new tax evasion policy.
  • Begin to implement tax evasion focused due diligence of staff, third parties and clients.
  • Begin a thorough risk assessment procedure of all areas of your business operations.
  • If you operate overseas or have a more complex corporate structure, ensure these are adequately reflected in the risk assessment.
  • Divide the outcome of the assessment into high, medium and low risk.
  • For high risk areas, start to develop a mitigation plan – these are your reasonable procedures.
  • Create a detailed timeline for implementation and review of those reasonable procedures.
  • Begin a comprehensive staff training programme, starting with staff in the areas most at risk of criminal facilitation.
  • When implementing the Tax Evasion: Failure to Prevent course, ensure high risk staff complete the 45-minute version and all other staff the 15-minute version.
  • Develop a mitigation plan for subsequent medium and lower levels of risk, and adopt a timeline to put these in place.
  • Regularly review all reasonable procedures and policies to ensure they are working.

Remember that reasonable procedures should be proportionate to the specific risks identified in the risk assessment.

No procedures at all may be considered as reasonable. BUT this must be backed up with evidence from a risk assessment and be kept under frequent review.

If you have started preparing…

  • Consider whether your completed or planned risk assessments take all aspects of the business into account.
  • Make sure you can evidence a top-level commitment to preventing facilitation of tax evasion.
  • Compare your Criminal Finances Act policy to the VinciWorks template.
  • Assess tax evasion focused due diligence measures for staff, third parties and clients, including the changes required to make to current procedures or policies.
  • Review the timeline for implementing reasonable procedures and ensure it is on track.
  • Ensure that staff are completing their training on the Criminal Finances Act.
  • Test that your reasonable procedures would successfully identify and expose an instance of facilitation of tax evasion.

Remember that you do not need to prevent all instances of facilitation of tax evasion by either staff or clients. Procedures that expose the wrongdoing in a timely manner will likely be found reasonable.

VinciWorks’ e-learning tax evasion course

VinciWorks’ interactive course Tax Evasion: Failure to Prevent, takes users through the “reasonable procedures” required under the Criminal Finances Act, providing examples of red flags to look out for. The course also contains interactive quizzes to help users review what they have learnt and is fully customisable. You can demo our tax evasion course by clicking on the button below.

Free demo