A fifth of companies ‘still reward financial risk-taking’

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Oct 02, 2017
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Revenue and Customs referred 1,135 people to prosecutors for tax evasion in 2015-16

Amer Ghazzal/Demotix/Corbis

Companies and their professional advisers face a crackdown over tax evasion under new laws in force today, as fresh figures show a rise in prosecutions.

Revenue and Customs started prosecutions against 1,135 individuals for tax offences in 2015-16, easily beating the target of 1,000, a report published today shows.

HMRC referrals to the Crown Prosecution Service rose sharply from 617 in 2012-13, according to the analysis by Thomson Reuters.

The Criminal Finances Act, which takes effects today and is billed as the British response to the Panama Papers scandal, aims to take the profit out of tax evasion. Under the act, a business could be criminally liable for the actions of its employees.

Businesses must have “reasonable procedures” in place to ensure that employees are not helping someone evade their taxes, wherever in the world it is owed.

However, a new survey of 500 companies by VinciWorks, an online compliance training company, found that a quarter of businesses have no policies in place to prevent financial crime and a tenth had no whistleblowing policy.

More than a fifth of all companies surveyed said that they had a bonus structure that rewards excessive risk taking, and four out of five were not taking action to reduce high risk operations such as dealing with cash transactions over £1 million.

More than a third of companies have started recording financial crime breaches, while more than three quarters, including half of financial services and law firms, reported that many of their colleagues were completely unaware of the laws and offences around tax evasion.

A spokesman for the researchers said: “The survey results show a worryingly large proportion of companies, and in particular the regulated profession, are still engaging in high-risk behaviour for tax evasion, failing to put policies in place against it and failing to properly train their staff to prevent it.”

Lawyers warned that tax officials would seek targets to show the impact of the new legislation. David Sleight, a criminal litigation partner at Kingsley Napley, said: “HMRC will be desperate to demonstrate that the new legislation has teeth and will be looking for unsuspecting scalps.”

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