The Criminal Finances Act 2017 took effect on 30 September 2017. It makes companies and partnerships, a ‘relevant body’, criminally liable if they fail to prevent the facilitation of tax evasion being carried out by an employee, anyone acting on their behalf or someone acting as an agent. If found guilty, the business could face unlimited fines and potentially further consequential sanctions within their industry or profession.
This Act has the effect of creating an offence at corporate and partnership level which does not require the directors/partners to have had any knowledge of the offence in question. Broadly, the offence is the failure to prevent the crimes of those who act for or on behalf of the corporate body or partnership instead of the need to attribute criminal acts to that body.
For a firm to be criminally liable under the new Act, there are three elements of the offence:
- There must be the execution of a criminal act of tax evasion.
- The crime must have been facilitated or carried out by a person associated with a relevant body.
- The relevant body failed to initiate adequate prevention procedures in relation to the act carried out by the associated person.
A defence is available when it can be shown that ‘reasonable prevention procedures’ were in place to prevent the associated person from committing or facilitating the crime; or that it would have been unreasonable or disproportionate to expect such procedures to be in place.
The government advises that any reasonable prevention procedures should be based on six guiding principles:
- Risk assessment – the relevant body should assess the nature and extent of its exposure to the risk of an associated person committing a criminal act;
- Proportionality – the procedures should take into account the nature, scale and complexity of the relevant body’s activities;
- Top level commitment – the management of the relevant body should be committed to preventing illegal acts and should foster a culture that tax evasion and its facilitation is never acceptable;
- Due Diligence – with appropriate procedures put in place with respect to all people who perform services for the relevant body;
- Communication – training staff and ensuring the message effectively gets across to all employees and agents;
- Monitoring and reviewing – ensuring that whatever procedures are put into place are regularly reviewed and updated and amended where necessary.
Please contact us if you require further information on this issue.
Internet link: GOV.UK Tackling tax evasion corporate-offence
The government have announced details of a new Help to Save saving scheme. The scheme is government backed and designed to support working people on low incomes build up their savings.
The scheme, administered by HMRC, will be open to working people who receive Working Tax Credits, and those who receive Universal Credit with a household income equivalent to at least 16 hours a week at the national living wage (currently £120 a week).
Over a four year period, savers can deposit up to £50 per month.
At the end of two years, savers will get a 50% bonus based on the highest balance achieved. Savers can then carry on saving for another two years and get another 50% bonus on their additional savings.
Over four years those saving the maximum amount of £2,400 will receive bonuses of £1,200.
Money paid into the account can be withdrawn at any time but will affect the final bonus payment.
The government has confirmed that all transactions, including checking the balance and paying in savings, will be managed in an online account available through GOV.UK and that further information will be available from early 2018.
Internet link: GOV.UK help to save
The Bank of England (BoE) has raised interest rates from 0.25% to 0.5%, the first rate rise in ten years.
In explaining the reasons behind the rise, the BoE monetary policy summary states:
‘CPI inflation rose to 3.0% in September. The MPC still expects inflation to peak above 3.0% in October, as the past depreciation of sterling and recent increases in energy prices continue to pass through to consumer prices. The effects of rising import prices on inflation diminish over the next few years, and domestic inflationary pressures gradually pick up as spare capacity is absorbed and wage growth recovers. On balance, inflation is expected to fall back over the next year and, conditioned on the gently rising path of Bank Rate implied by current market yields, to approach the 2% target by the end of the forecast period.’
Mark Carney, the Governor of the BoE, suggested that many mortgages, credit cards and loans would not be impacted in the short term by the interest rate rise. He also indicated that two more interest rate rises may be required by 2020 to help bring inflation back to the BoE’s target.
Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said:
‘The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several MPC members, signalling their intention to vote for a change of course.
‘Businesses will be watching the reaction of consumers closely, and what’s important is the pace of any future rises. As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.’
Internet links: Bank of England news CBI news
With the Chancellor’s first Autumn Budget due to be presented on 22 November, professional bodies and business groups are setting out their Budget wishlists. Recommendations include changes to Business Rates, a ‘Brexit ready’ Budget, incentives for business and an appeal for changes to the Apprenticeship Levy. The ICAEW is urging that the government give sufficient attention to Making Tax Digital to ensure a successful roll out and making the necessary changes to accommodate Brexit.
Meanwhile, the Federation of Small Businesses (FSB) has urged Philip Hammond to deliver a ‘Brexit-ready’ Budget, which rules out any new business tax increases and maintains investment incentives.
We will update you on pertinent announcements.
Internet links: CBI FSB ICAEW autumn budget
HMRC have changed the way in which they will assess some taxpayers removing the need for these individuals to complete a Self Assessment Tax Return. These changes took effect from September 2017.
The affected taxpayers fall into one of two categories:
- new state pensioners with income more than the personal tax allowance (£11,000) in 2016/17; and
- employees or pensioners with PAYE tax codes who have underpaid tax and who cannot have that tax collected through their tax code because it is too high to code out.
HMRC have also confirmed that all existing state pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from self assessment in 2017/18. This may mean that some clients are dropped out of self assessment and issued an assessment instead based on the information which HMRC hold. Of course, whether the assessment is actually correct will be a different matter.
‘HMRC will write to customers from September 2017 with a tax calculation. This could be a P800 or a Simple Assessment letter (PA302).
The letter will show their:
- income from pay
- state benefits
- savings interest
- employee benefits.
Customers just need to check the information is correct, and if it is they can pay their bill online or by cheque by the deadline in the letter.
If a customer thinks any information is incorrect they have 60 days to contact HMRC. For instance, if they think amounts used are wrong or HMRC didn’t act on information received.
Should customers miss the deadline they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.
If customers are not happy with the follow-up response from HMRC, they have 30 days to appeal against the decision.’
If you would like help with your personal tax affairs please get in touch.
Internet links: GOV.UK briefing policy paper