How can organisations protect themselves?
An organisation would need to prove that, on the balance of probabilities, that they had reasonable procedures in place that would prevent the facilitation of tax evasion by someone acting on their behalf. There are a number of phases, that would run from an initial risk-assessment, through securing Board engagement and top-level commitment, undertaking an impact analysis, developing proportionate risk-based procedures and training. There will then be a need to monitor those procedures on an on-going basis.
It is likely that there are a number of existing procedures that companies will already have in place that they can leverage effectively from. Examples include those developed for AML/KYC compliance or following the Bribery Act 2010.
What should organisations be doing now?
The first stage is to undertake an initial risk assessment and secure the Board’s engagement. This will then determine the key priorities for due diligence. This is in line with each bank’s agreement with HMRC under the Code of Practice for Taxation of Banks.
HMRC accept that, providing these are undertaken by September and a plan developed to implement the findings, then in most instances this will be sufficient for “day-one” compliance.
What should organisations do if they identify that someone acting on their behalf may have been facilitating tax evasion?
Professional advice should be sought at the earliest opportunity.
There is the facility for self-reporting and negotiating a deferred prosecution agreement. If this is properly managed, it will significantly help to mitigate the financial and reputational risks.
As a condition of any such agreement, companies will need to put procedures in place so that they can demonstrate compliance with the terms of any such agreement.