The government is set to introduce new legislation under the Criminal Finances Act 2017 which will make companies liable for criminal acts committed by their employees who assist or encourage tax evasion by others such as suppliers or customers.
Businesses will be liable even if the senior management were not involved or were unaware of the acts being committed. The measures are expected to be introduced in September 2017 and will apply to both UK and non-UK tax.
Pinsent Masons a Law Firm has found that 76 per cent of UK businesses are not aware of these changes. Those sectors of the economy, which are most likely to be affected by the facilitating of tax evasion, were no more aware of the changes than any other sectors. Seventy-two per cent of legal firms and 58 per cent of accountancy and financial services did not know about the new rules.
Pinsent Masons expressed concern about this lack of knowledge, as businesses need to take preventative measures to minimize the risk of criminal prosecution.
The firm said that a criminal prosecution could ruin a business and so any inadvertent violation of the law could prove very costly. Large businesses are more likely to be caught out by the rules because their operating procedures tend to be more complicated and they have many more employees.
Businesses may also have other problems such as winning government contracts either in the UK or overseas or they could face restrictions in operating in regulated markets.