Criminal tax evasion ‘very problematic’ for companies, claims CIoT

PLANS TO make it an offence for companies that fail to stop their staff facilitating tax evasion has been heavily criticised by a leading tax institute, arguing that it will be “very problematic” to hold businesses responsible for an individual’s actions.

The Chartered Institute of Taxation’s (CIoT) tax policy director John Cullinane has come out against the Criminal Finances Bill, which was confirmed to be moving ahead in this week’s Queen’s Speech.

Cullinane said that the CIoT is “concerned” that the proposal will clash with similar laws that are already in place to clampdown on the facilitation of tax evasion, adding that it will be “very problematic to hold a company responsible for an individual’s actions”.

“If the government believes that criminal sanctions need to be strengthened in this area then the new offence must not only be phased in gradually to allow businesses time to familiarise themselves with the regime and implement appropriate procedures so that they can comply with it, but it must also be subject to a clear defence of reasonable care being available,” said Cullinane.

“The key to this whole issue is clearly drafted legislation, supported by guidance containing practical examples, so that companies understand the practical steps expected of them which will actually help combat tax evasion and money laundering – as well as enabling the compliant effectively to protest their innocence.”

The legislation aims to crackdown on companies that fail to stop their staff facilitating tax evasion, seen by many as a reaction by the government to ease fears over its stance on tax evasion following the Panama Papers leak.

Earlier this month David Cameron said at the Anti-Corruption Summit in London that the government would also be consulting on extending the offence to cover money laundering.

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