Cordium to help advisory firms comply with stricter tax rules
New Act due to come into force in September
International risk and compliance firm Cordium has launched a solution to help advisory firms cope with the demands of the Criminal Finances Act, which will introduce stricter laws on tax evasion.
The incoming law, which is expected to come into force in September, will make sure financial institutions are held to account for the actions of their employees in respect of tax evasion.
The measure introduces two new criminal offences, including one of ‘domestic fraud’, which criminalises corporations that “fail to put in place reasonable procedures to prevent their representatives from criminally facilitating tax evasion”.
The new ‘overseas fraud’ offence meanwhile criminalises corporations that carry out business in the UK but fail to prevent representatives facilitating tax evasion in another jurisdiction.
Cordium’s solution is aligned with six guiding principles it said form a “reasonable prevention defence”: risk assessment; proportionate procedures; top-level commitment; due diligence; communication and training; and monitoring and review.
The government has said offshore tax evasion was the “driving force” behind the new corporate offence, but it will apply to both onshore and offshore evasion, and to all taxes.
“Fund managers, wealth managers and other financial service businesses are subject to a higher risk of facilitating tax evasion and we expect such businesses to be held to a higher standard when it comes to the changes required,” said Cordium managing director Matthew Crisp.
“The speed with which the new rules have materialised means firms need to act immediately to ensure compliance. Our new solution will help clients adapt to the measures as quickly as possible in a manner that is practical from a business perspective.”
Under separate rules that came into effect in January, HM Revenue & Customs can now charge advisers and their firms civil penalties if they are deemed to have enabled offshore tax evasion.
Advisers face fines of up to 100% of the amount evaded or £3,000 – whichever is the greater amount – as well as being ‘named and shamed’ by the taxman.
