Anti-Tax Evasion Policy
POLICY STATEMENT AND PROCEDURES
This Statement sets out Spring’s(the Company’s) policy in relation to tax evasion. It has the full support of both the Company’s directors and senior management.
Part 3 of the Criminal Finances Act 2017 creates a new corporate criminal offence where a corporate entity fails to prevent the facilitation of tax evasion by its staff, agents and contractual associates.
- The purpose of this document is to:
- set out a clear policy against tax evasion and the facilitation of such an offence
- define the responsibilities of the Company, its employees and associated persons in complying with this policy
- provide guidance on how to recognize and deal with tax evasion and actions facilitating it
- provide guidance on assessing the risk of exposure resulting from potentially facilitating, or potential facilitation of, the offence of tax evasion and the elimination or mitigation of such risk; and
- encourage employees and associated persons to report any suspicion of such behaviour through appropriate channels.
Under the Act, the Company could face an unlimited fine should it face a criminal conviction for committing tax evasion or failing to prevent facilitation of tax evasion. The impact on the Company’s reputation would be significantly detrimental.
- The Company has a zero-tolerance approach to all forms of tax evasion. Employees of the Company, its agents and contractual associates must not undertake any transactions which:
- Cause the Company to commit a tax evasion offence; or
- Facilitate a tax evasion offence by a third party who is not an associate of the Company.
It is the Company’s policy to conduct all of its business dealings and relationships professionally, honestly, ethically and with integrity. At all times, Company business should be conducted in a manner such that the opportunity for, and incidence of, tax evasion is prevented.
Governance and internal control procedures are already in place to meet the statutory requirements, and there is no suggestion that the Company tolerates tax evasion, or that staff engage in such behaviour. However, adopting an express corporate policy will assist the Company to defend any allegation that it has facilitated tax evasion.
Tax Evasion and Tax Avoidance
Tax evasion is the illegal non-payment or under-payment of taxes, usually as the result of making a false declaration (or no declaration) of taxes due to the relevant tax authorities, which results in legal penalties if the offender is caught.
Tax evasion involves all forms of tax, including (but not limited to) income tax, national insurance contributions, corporation tax, VAT, stamp duty and excise duties.
Tax avoidance, by contrast, is seeking to minimise the payment of taxes without deliberate deception. This is usually legitimate but is often contrary to the spirit of the law, e.g. involving the exploitation of loopholes.
Importantly the corporate criminal offence of facilitation only applies to tax evasion. Examples of scenario of concerns can be found in Schedule 1.
The Criminal Offence
Under the Criminal Finances Act 2017, a separate criminal offence is automatically committed by a corporate entity where the tax evasion is facilitated by a person
acting in the capacity of an “associated person” to that body.
For the offence to be made out, the associated person must deliberately and dishonestly take action to facilitate the tax evasion by the taxpayer. If the associated person accidentally, ignorantly, or negligently facilitates the tax evasion, then the corporate offence will not have been committed.
The Company does not have to have deliberately or dishonestly facilitated the tax evasion itself; the fact that the associated person has done so creates the liability for the Company.
It is a defence to the corporate criminal offence of facilitating tax evasion if the Company can prove that it has in place such prevention procedures as it is reasonable to expect in the circumstances. Government guidance suggests an appropriate set of prevention measures which gives due recognition to the following:
- risk assessment
- the proportionality of risk-based prevention procedures
- top level commitment
- due diligence
- communication (including training)
- monitoring and review
Importantly, corporate criminal offence applies to tax evasion, but Spring’s management are strongly opposed to any form pf avoidance that is contrary to the spirit of the law, or might be perceived as aggressive by HM Revenue and Customs.
The Company must ensure a policy on prevention is brought to the attention of all staff.
Objective of this policy
This policy provides a coherent and consistent framework to enable the Company’s employees (and other “associated persons”) to understand and implement arrangements enabling compliance. In conjunction with related policies and key documents it will also enable employees to identify and effectively report a potential breach.
- The Company requires that all relevant persons:
- Act honestly and with integrity at all times and to safeguard the Company’s resources for which they are responsible
- Comply with the spirit, as well as the letter, of the laws and regulations of all jurisdictions in which the Company operates, in respect of the lawful and responsible conduct of activities
Scope of this policy
This policy applies to all of the Company’s activities. For partners, joint ventures and suppliers, it will seek to promote the adoption of policies consistent with the principles set out in this policy.
Responsibility to control the risk of tax evasion occurring resides at all levels of the organisation. It does not rest solely within finance and accounting, but in all departments. It covers all personnel, including permanently employed, temporary agency staff, contractors, non-executives, agents, and consultants.
The Company’s commitment
- The Company commits to:
- Setting out a clear anti-tax evasion facilitation policy and keeping it up to date
- Making all employees aware of their responsibilities to adhere strictly to this policy at all times
- Raising awareness of the risks of tax evasion with employees so that they can recognise and avoid occurrences of potential tax evasion by themselves and others
- Undertaking a risk assessment to identify those areas of the Company’s business where risk is considered to be highest
- Targeted training of services where the perceived risk is higher
- Promoting good ethical behaviour by staff in all of its forms
- Encouraging its employees to be vigilant and to report any suspicions of tax evasion, providing them with suitable channels of communication and ensuring sensitive information is treated appropriately
- Investigating instances of alleged tax evasion
- Referring investigations to the Police where it is appropriate to do so
- Taking firm and vigorous action against any individual(s) involved in tax evasion, or the facilitation of it
- Providing information to all employees on how to report breaches and suspected breaches of this policy
- Including appropriate clauses in contracts to prevent tax evasion.
The Company seeks to maintain relevant procedures, including top-level commitment to tackling tax evasion and effective communication, including training. Senior management has an additional responsibility (beyond that of the employees own) for ensuring this policy is communicated effectively to all staff and frequently refreshed.
Each employee, and associated person, has a personal responsibility to ensure that they have read, understood and comply with this policy. Employees must notify their line manager or report in accordance with our Whistleblowing Policy, as soon as possible, if they believe or suspect a breach of this policy has occurred.
For example, if a request is received for assistance in circumstances where it is known or suspected that the customer or third party intends to use that assistance to enable them to fraudulently evade tax, this request should not be responded to immediately. If necessary, advise that a manager will need to be consulted. The details should then be reported as noted above as soon as possible.
Any employee who breaches this policy will face disciplinary action, which could result in dismissal for gross misconduct.
Raising a concern
The Company is committed to ensuring that there is a safe, reliable, and confidential way of reporting any suspicious activity, and wants each and every member of staff to know how they can raise concerns.
All have a responsibility to help detect, prevent and report instances of tax evasion. If you have a concern regarding a suspected instance of tax evasion, please speak up – your information and assistance will help. The sooner it is brought to attention, the sooner it can be resolved.
There are multiple channels to help raise concerns. Please refer to the Company’s Whistleblowing Policy and determine the favoured course of action. Preferably the disclosure will be made and resolved internally (e.g. to a line manager). Where internal disclosure would not be appropriate, concerns can be raised with any Director of the Company. Raising concerns in these ways may be more likely to be considered reasonable than making disclosures publicly (e.g. to the media).
Staff who raise concerns or report wrongdoing could understandably be worried about the repercussions. The Company aims to encourage openness and will support anyone who raises a genuine concern in good faith under this policy, even if they turn out to be mistaken.
The Company will ensure the continuous review and amendment of this policy document, to ensure that it remains compliant with good practice and legislative requirements.
Responsible Officer: Senior Financial Officer
Next Review date: March 2021
Scenarios of Potential Concern
This list of is not designed to be an exhaustive, nor are they set out as definitive indicators of tax evasion or the facilitation of such an offence. These suggestions are designed to act as indicators of actions that should prompt further due diligence or consideration of the actions you are being asked to take or parties you are engaging with:
- You become aware, in the course of your work, that a third party has made or intends to make a false statement relating to tax, has failed to disclose income or gains to, or to register with, HMRC (or the equivalent authority in any relevant non-UK jurisdiction), has delivered or intends to deliver a false document relating to tax, or has set up or intends to set up a structure to try to hide income, gains or assets from a tax authority
- You become aware, in the course of your work, that a third party has deliberately failed to register for VAT (or the equivalent tax in any relevant non-UK jurisdiction) or failed to account for VAT
- A third-party requests payment in cash rather than through an account with a recognized bank and/or refuses to sign a formal commission or fee agreement, or to provide an invoice or receipt for a payment made
- You become aware, in the course of your work, that a third party working for us as an employee asks to be treated as a self-employed contractor, but without any material changes to their working conditions, or a family member or friend requests this treatment without adequate support to that
- A third-party requests that payment is made to a country or geographic location different from where the third party resides or conducts business
- You receive an invoice from a third party that appears to be non-standard or customised
- A third-party refuses to put terms in writing or asks for contracts and other documentation to be backdated
- You notice that the Company has been invoiced for a service or fee payment that appears too large or too small, given the service stated to have been provided
- A third party requests or requires the use of an agent, intermediary, consultant, distributor or supplier that is not typically used by or known to the Company
- Transactions or invoices requested to be sent to non-UK-resident customers, particularly to those resident in jurisdictions with a low tax transparency rating
- Any requests to maintain secrecy of a transaction, beyond the usual confidentiality associated with business arrangements
- An anonymous transaction is proposed, or one with or arranged by individuals with whom you have not had a face-to-face relationship.