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Preventing fraud in your workplace

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. This is according to Aziz Rahman, senior partner at serious and corporate crime defence specialists Rahman Ravelli.
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Plans set out in a HMRC consultation document have stipulated that the enablers of tax avoidance could pay a fine of up to 100 per cent of the tax that their clients avoided.

Until now, it has usually been the tax avoiders themselves who have incurred penalties, but these regulations will target those who advised on, or facilitated, a tax avoidance scheme. 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? 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, here are six essential tips to prevent tax avoidance in the workplace.

(1) Due dillegence

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.

(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.

(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.

(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.

(5) Introduce anti-fruad 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.

(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.

Aziz Rahman is senior partner at serious and corporate crime defence specialists Rahman Ravelli.

Image: Shutterstock

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