COMPLIANCE
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Aziz Rahman,
Senior Partner,
Rahman Ravelli
Currently tax avoiders face
significant financial costs when
HMRC defeats them in court.
However, those who advised on,
or facilitated, the avoidance bear
little risk. The government is acting
to make sure that tax avoidance is
rooted out at source and this action
will target all those in the supply
chain of tax avoidance arrangements.
Aziz Rahman, Senior Partner at legal
practice Rahman Ravelli is urging business
owners to step up their efforts to prevent
tax avoidance. He warns that business
owners need to be proactive in their
attempts to prevent tax avoidance in the
workplace, as tough new laws are set to
be introduced and that accountants, tax
planners and other financial professionals
will come under increased scrutiny.
The consultation document also
clarifies the rules around whether proven
tax avoiders have taken reasonable care
to ensure their tax returns do not contain
inaccuracies, making it simpler to enforce
penalties when avoidance schemes are
defeated.
This is the latest of a number of
government measures designed to tackle
illicit finance and tax dodging. These include
a new criminal offence for corporations
that fail to prevent the facilitation of tax
evasion and new sanctions against those
who engage in multiple avoidance schemes
which are defeated by HMRC.
Rahman said that the hard-hitting
proposals require further clarification,
as there are still too many ‘grey areas’.
“When does tax planning tip over into tax
avoidance? Can fines be issued even if
the guidance given by tax advisers is not
strictly illegal? Will tax advisers face fines
even if they warned clients about possible
risks?”
He added: “Some high-profile cases
have involved schemes that were only
deemed to be illegal years after they
were established. This puts financial
professionals in the firing line even though
they may have genuinely believed that
these schemes were lawful.”
While the new rules will directly target
financial professionals, the onus is still
on business owners to ensure that their
company is legally compliant. To make this
task easier, Rahman offers six essential
tips to ensure compliance and prevent tax
avoidance in the workplace.
Tip 1:
Due diligence
If you are a small company with just the
one accountant – who is either on the staff
or hired from an accountancy firm – hold
regular meetings with them and don’t
be afraid to ask questions. If you are a
major company, make sure your finance
department is regularly audited – and,
ideally, subject to unannounced checks.
Tip 2:
Check the legality of tax
schemes
If a tax scheme is proposed by either a
member of staff or an outside party, you
have to check that it is legal. If it seems
too good to be true, unnecessarily complex
or those proposing it cannot produce
evidence of how it works, it is best to
steer clear – or at the very least seek legal
advice about the proposal.
Six ways to prevent tax
fraud in your workplace
Accountants, tax planners and advisers who provide advice on how to avoid tax will
face tough penalties under new proposals being consulted on by the government.
Under the plans set out in an HMRC consultation document which ran until October 12,
enablers of tax avoidance could have to pay a fine of up to 100 per cent of the tax the
scheme’s user underpaid
Tip 3:
Develop an anti-fraud culture
Companies of all sizes must make it clear
to staff and third parties who work with
them that fraud will not be tolerated.
Creating a company handbook that
emphasises this and introducing anti-fraud
training for staff can help develop the
culture of honesty.
Tip 4:
Assess your vulnerability
Do your research. A company should
examine the way its tax affairs are handled
and consider whether it needs to tighten
up the way financial matters are managed
and scrutinised; whether it has just one
accountant or a whole finance department.
Tip 5:
Introduce anti-fraud procedures
Procedures should be designed to prevent
opportunities for individuals to be able to
handle finances without being scrutinised
by colleagues. If companies are unsure
exactly what they should be introducing,
they should seek legal advice.
Tip 6:
Whistle blowing
If staff know or suspect that tax fraud is
being committed by a colleague, it can
often be difficult for them to speak up
if they are not sure who they should be
reporting it to. Every company, however
small or large, needs to have a system
in place for employees to report their
suspicions confidentially – and for those
suspicions to be investigated.
Founded in 2001, Rahman Ravelli has
become one of the fastest-growing
and highly-respected legal practices
specialising in the defence of serious
fraud, complex crime, regulatory matters
and commercial litigation in the UK.
The firm has represented a host of
high-profile clients both nationally and
internationally.
When does
tax planning
tip over
into tax
avoidance?
Can fines
be issued
even if the
guidance
given by tax
advisers is
not strictly
illegal?
