From 30 September 2017, businesses (corporations and partnerships) will be deemed to have facilitated in tax evasion by their associates if these businesses fail to put in place reasonable steps to prevent such actions.
The rules are widely drawn. For example, associates include suppliers and contractors, and tax evasion includes foreign tax evasion. It is therefore important for businesses to review their current internal processes to ascertain if they are reasonable before the new rules come into force.
To help businesses assess their position and put in place preventative processes and procedures in proportion to the businesses risks under the rules, HMRC set out the following guiding principles.
- Risk assessment
- Proportionality of risk-based prevention procedures
- Top level commitment
- Due diligence
- Monitoring and review
The guiding principles are flexible and outcome focused. It is not a checklist of things that all businesses must do to reduce their risk of liability nor is it intended to be a one-size-fits-all approach but take into account the business size, nature and complexity.
The rules apply to businesses of all sizes. As such, initial questions should be asked as to what processes or procedures are currently in place to tackle tax evasion.
If you are not certain about how the new rules will affect your business, you can find out more on the GOV.UK website or get in touch with the team at CB Reid.