Last week whilst the Prime Minister was defending his own personal financial affairs to the world he was also planning to make a speech to Parliament that would have a big impact upon tax advisers, accountants and lawyers up and down the kingdom.
We had already seen the proposed legislation in respect of criminal offence related to facilitation and enabling of offshore tax evasion, but this is an extension to all onshore and offshore matters.
Crucially advisers will need to be able to demonstrate that they have the relevant procedures, processes, checks and balances to ensure that lines are not crossed. Of course the biggest risk will come for those advising larger corporates and high net worth individuals, where more complex tax issues tend to arise.
These processes and procedures will need to be communicated regularly and effectively across the practice and reviewed on an ongoing basis.
This piece of legislation is based heavily on the Bribery Act of 2010. It’s scope is wide ranging and will include non-UK companies in certain situations, particularly those that facilitate UK tax evasion. That means firms in Jersey and Guernsey are in scope for example.
Under the plans as currently drafted, companies and partnerships would commit a criminal offence if their employees, or others acting on their behalf criminally facilitated the evasion, rather than the avoidance, of tax. The employee or individual would have had to have intended to help with tax evasion, so it would not catch businesses whose representatives act unwittingly. Because of the increasingly blurred lines between ‘avoidance’ and ‘evasion’ extreme care will be required.
Below is a link to the Government consultation on this matter, and we recommend that all our clients read and digest this. Dare I say it but it does mean that second opinions on riskier cases will become increasingly important and appropriate.