Firms risk ‘sleepwalking’ into fines over new legislation

Scottish firms could be hit with heavy fines if they fail to prepare for the introduction of new legislation designed to curb tax evasion.

Jon Preshaw, tax director at PwC in Scotland, said it seemed firms were doing more about data protection regulations to be brought in next year than they were about the Criminal Finances Act that is to be introduced next month.

The new act makes companies and partnerships criminally liable if they fail to prevent tax evasion by staff or an external agent, even if they are not involved directly, are unaware of the conduct and even if it happens overseas.

Mr Preshaw said firms will have to show they have procedures in place to mitigate the threat of impropriety if they want to beat any charges.

“It doesn’t appear that the Criminal Finances Act has generated as much interest as, for example GDPR, but it could have a really profound impact on companies and partnerships that aren’t prepared,” Mr Preshaw said.

“When the legislation goes live on September 30, Scottish businesses that have failed to prepare could face fines running into millions.”

He continued: “What would be really frustrating about that is that for many of the companies affected, it will have been entirely avoidable.”

PwC yesterday received a £5 million fine of its own from the UK’s accountancy watchdog over misconduct in relation to the 2011 audit of RSM Tenon.

The Financial Reporting Council also fined PwC partner Nicholas Boden £114,750 for his role.

It follows a formal complaint by the FRC’s Executive Counsel in connection with their conduct in December.