show that it has brought in reasonable prevention procedures. The only possible exception is where it is not ‘reasonable to expect’ a business to have any prevention procedures – although HMRC has been clear that it thinks this could only apply to the smallest businesses.
Businesses can protect themselves from prosecution by taking a number of steps, including: ●●Documenting a risk assessment which is appropriate to the size and complexity of the business. ●●Developing and implementing policies and procedures which are proportionate to the risks identified ●●Demonstrating top level. commitment to implementing these policies and procedures ●●Clearly communicating policies and procedures to all associated persons and providing employees and contractors with appropriate training. ●●Monitoring and reviewing their procedures to ensure that they are working in practice.
Note that no tax needs to have been successfully evaded, or for those involved at stages 1 or 2 to have been prosecuted, in order for a business to be prosecuted under the CCO rules.
Examples of facilitation Businesses could find themselves liable to prosecution in a wide range of cases, including: ●●Members of a finance or accounts payable team deliberately altering invoices to benefit the tax position of a supplier. ●●The failure to question why a supplier is not registered for UK VAT where their turnover is thought to exceed £85,000. ●●Members of staff colluding to allow
inflated expense claims to be made, or disguising the provision of benefits to staff.
HMRC has recently stepped up enforcement activity on CCO. Examples of particular interest to businesses in the electrical sector include focusing on businesses with off-payroll workers who may not have made sufficient checks on the employment status of those workers and questioning businesses who could be vulnerable to becoming involved in VAT supply chain.
Protecting your business A company or partnership which fails to prevent facilitation of tax evasion will be guilty under the CCO rules unless it can
BDO has worked with a wide range of businesses, including several in the electrical sector, to help them develop a reasonable response to the CCO rules. HMRC’s guidance emphasises that businesses cannot simply adopt ‘off the shelf’ procedures and expect to be protected. Nevertheless, there are a number of quick wins and we have developed a suite of template policies which can assist in developing a robust response to CCO. We can also offer a comprehensive online training tool which can be rolled out to all those within the business who are able to influence financial transactions, such as your HR, finance, and procurement teams. How much damage would it cause your business to be publicly cited in a tax evasion case? For most businesses that is a scary question so it is imperative that businesses act now to ensure that they do not fall foul of the legislation.
James Paterson is a Partner in BDO’s Scottish tax practice. He can be contacted on 0131 347 0376 or at
james.paterson@
bdo.co.uk
CABLEtalk DECEMBER 2019/JANUARY 2020 35
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