Many businesses unaware of the criminal offences associated with tax evasion

Mar 18, 2019
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Three-quarters of businesses are unaware of the corporate criminal offences relating to activity which is seen to facilitate tax evasion.

On 30 September 2017, the Criminal Finances Act was introduced; which meant companies and partnerships can be found liable for failing to prevent the criminal facilitation of tax evasion, by anyone or any organisation that is providing a service for them, or on their behalf.

This Act, applies to companies and partnerships of all sectors and sizes, for both onshore and offshore evasion.

On behalf of HM Revenue and Customs (HMRC), Ipsos conducted a survey, which found that out of 1,000 UK companies and partnerships only 25 per cent had heard of the legislation.

Figures indicated that larger companies were more likely to be aware (58 per cent) than medium (30 per cent), small (26 per cent) and micros (24 per cent).

Compared to all industry sectors, financial and insurances firms were twice as likely to be aware of the changes.

Moreover, those businesses that are aware of the changes demonstrated good knowledge of the corporate criminal offences within the Act.

From the survey, 76 per cent of businesses knew that they could be found liable if they fail to prevent the facilitation of tax evasion by anyone providing a service on their behalf; for example, employees, suppliers, subcontractors or agents.

As a result of the tax evasion, 70 per cent of respondents were aware that if there was a successful prosecution there would be repercussions of unlimited fines, loss of regulatory approval or director qualification.

In spite of HMRC stressing the need for companies to access the risk of being exposed to the facilitation of tax evasion, only 24 per cent have done so, and the majority did not have the risks formally documented.

Large businesses were three times as likely as micro businesses to have assessed this risk (57 per cent compared with 19 per cent).

Almost a quarter (23 per cent) of all businesses stated they had something in place to monitor and review policies and procedures.

Yet, only one in 10 businesses had undertaken any internal reviews into compliance and behaviour, and of those just two per cent had discovered misconduct as a result.

Concerningly, only eight per cent of business had organised training in the last 12 months that related to the corporate policies and procedures to prevent the facilitation of tax evasion within the organisation.

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