New tax evasion laws, which will hold a company criminally liable if any of its employees help commit tax evasion, are coming into force on Saturday – but experts say businesses are ill-prepared.
Unlimited fines can now be levied under the new Criminal Finances Act, meaning companies would be well-advised to put in place measures to cover their back.
Firms can defend themselves from criminal liability if they show they implemented reasonable prevention procedures, but experts say many businesses are not aware of the risks.
Read more: Tax evasion: Are you guilty by association?
“The new offence has crept in somewhat under the radar. Many companies have failed to appreciate the new level of oversight it requires and are unprepared as a result,” said Jonathan Pickworth of law firm White & Case.
He adds that tax advisers, professional services forms and financial institutions such as banks and investment managers will be most at risk. But no company will be exempt from the legislation.
Andrew Tuson, partner at law firm Berwin Leighton Paisner, said the Financial Conduct Authority (FCA) would likely be closely cooperating with HM Revenue & Customs (HMRC) to gather how firms have prepared.
“Firms should expect that the FCA will not wait a protracted period before assessing whether firms have in place appropriate systems and controls to manage the new corporate criminal offences of failure to prevent the facilitation of UK and overseas tax evasion,” he said.
Michael Harris, of LexisNexis Risk Solutions, explained that data will be important to ensure a business does not fall foul of the new laws.
“The key is to know who the customer is – you have to conduct proper checks on your customer, get verification on that information from independent sources. If it's a business then you need to understand what the business is about, who the beneficial owners are and who's behind it. That depends on having good systems in place, and access to good research tools,” he said.