Caveat emptor, as many of you will know, means that a buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. In other words, unless you are protected by warranties, the buyer takes the risk.
The person(s) drafting the Criminal Finances Act 2017 (CFA) took a shine to this principle.
From 30 September 2017, limited companies and partnerships became criminally liable if they failed to prevent tax evasion by their staff or by their external agents. This applies even if the affected business was not aware that an act of tax evasion had taken place.
Accordingly, the directors and partners of affected businesses will need to become, overnight, tax experts. They will need to be able to spot employees that are secretive about their work, maybe they never take holidays, what are they up to?
They should ensure that contracts of employment include a requirement that they do not engage in facilitating tax evasion, and to report suspicions or concerns immediately.
This new legislation should be of concern to all company directors and partners. As mentioned above, this is no woolly regulation, if you break this law there are criminal penalties.
Who could imagine that you may one day be gazing from behind bars for the acts of a nefarious employee, or agent, and you had no idea what was happening.
The consequences of caveat emptor could be said to have expanded, from being stuck with defective goods (without a warranty), you had no idea that your purchase would live up to its expectations; into, time spent at Her Majesty’s pleasure for not being aware that your staff were up to no good.
Updates on the CFA and many other changes in business legislation are regularly showcased as part of the content we provide professionals. In fact, we will shortly be adding tutorials on this topic to our InforLearning service. If you would like to see how our online services could help you develop business for your firm, get in touch for a demonstration.