A survey by law firm Pinsent Masons found 55% of the UK’s 100 largest companies do not include their strategy to combat tax evasion in their tax strategy documents, annual reports, environment social and governance policies or other related documents.
Of the financial services businesses in the FTSE 100, 33% failed to mention tax evasion.
Since last year, businesses are criminally liable if their employees facilitate tax evasion within the company.
Pinsent Masons warned financial services businesses are likely to face the biggest challenges when it comes to preventing the facilitation of tax evasion as they handle numerous financial transactions for high net worth individuals and corporations, “who tend to have the most complex tax affairs”.
Jason Collins, partner at the law firm said, “FTSE 100 firms failing to publicly address tax evasion could raise questions for stakeholders over their management of reputational and financial risks.
“Compliance practices at FTSE 100 firms are increasingly under scrutiny now that they are liable for tax evasion at any level. Financial services firms in particular will be under the spotlight – it comes with the territory.”
He added, “With the potential for unlimited fines it’s not surprising that shareholders and other stakeholders will want reassurance that big businesses have got the risks of tax evasion under control.”
In its Finance Bill last year, the UK government proposed new sanctions for accountants, lawyers, tax planners and advisers who provide advice on how to avoid tax.
According to these proposals, those who design, market or facilitate the use of tax avoidance arrangements that are defeated by HMRC could have to pay a fine of up to 100% of the tax the scheme’s user underpaid.
In March this year, EU finance ministers approved new measures ensuring accountants, advisers, lawyers and banks will soon be obliged to report “potentially aggressive” tax avoidance schemes to the authorities.