As of 30 September 2017 a new corporate offence was introduced which can result in employers facing liability if their employee is up to no good when it comes to tax.
The offence is committed under the Criminal Finances Act 2017 if an employer fails to prevent an employee (or anyone else for that matter who performs services for the business) from criminally facilitating tax evasion.
But what does facilitating tax evasion mean?
A person is committing an offence if they are “knowingly concerned” or otherwise taking steps which help or allow someone else to fraudulently evade tax. This does need to relate to them carrying out their duties for the employer however, for the employer to be at risk of incurring liability.
What are the potential penalties?
This is a criminal offence, so along with adverse publicity, the business could be facing a hefty fine.
How can an employer avoid this?
There is a defence available if the employer can prove it either had reasonable prevention procedures in place when the offence was committed, or that it shouldn’t be expected to have had any such procedures in place.
In practical terms, this is likely to mean risk assessments leading potentially to adequate training and policies for staff, especially where this risk may be high(er) – such as HR, payroll and finance teams – and suitable monitoring and review.