Anti-Facilitating Tax Evasion Policy (Jan26)

The person responsible for this policy is Timothy Halliday who is the firms Compliance Officer for Legal Practice/ Money Laundering Reporting Officer. In general, that is the person to whom you should report any concerns you have about possible tax evasion or to whom you should turn with questions. Junior members of staff may, alternatively, raise their concerns with their supervisor.

 Warning

All staff and other associated persons who have access to this policy are required to comply with its requirements.

 Failure to comply with this policy may be treated as gross misconduct and result in disciplinary action, in addition to any other professional or criminal sanctions which may apply.

1. Scope

This policy applies to all employees in The Eric Whitehead Partnership, including managers and consultants.

2. Our commitment

 As a firm we are committed to doing business ethically and in accordance with our professional and legal obligations. Our commitment to avoiding facilitating tax evasion is one aspect of that.

Pursuant to Government and Law Society guidance, we have carried out an assessment of the facilitation of tax evasion risks to our firm taking into account our clients, services, retainers, and compliance practices. The risk assessment will be reviewed at regular and appropriate intervals.

Moreover, under Part 3 of the Criminal Finances Act 2017, the firm is expected to have reasonable procedures to prevent the criminal facilitation of tax evasion by staff or other associated persons. Without such procedures the firm may be exposed to corporate criminal sanctions. This policy sets out those procedures, taking into account the risks identified in the risk assessment.

The Criminal Finances Act 2017

Under this Act, there are two offences:

1. Failure to prevent the facilitation of UK tax evasion; and
2. Failure to prevent the facilitation of foreign tax evasion.

Key definitions

Tax evasion is fraudulent activity involving dishonesty, where an individual or business deliberately omits, conceals, or misrepresents information in order to reduce their tax liabilities. It is, essentially, an offence of cheating the public revenue or fraudulently evading UK tax and is a criminal offence and can be punished with criminal prosecution, fines, or disciplinary actions. The firm would also face equivalent consequences and its reputation may be significantly damaged.

The offence of tax evasion requires an element of fraud, which means there must be deliberate action, or omission with dishonest intent. It is different from honest errors in tax affairs, even when such errors amount to an offence.

Tax evasion by way of fraudulent activity constitutes the common law offence of cheating the public revenue. There are also statutory offences of “fraudulently evading” various taxes. It is not necessary that any tax is actually successfully evaded. Examples of tax evasion include:

• Failing to report/under reporting business income to HMRC.
• Misreporting personal expenses as tax-deductible business expenses.
• Conducting business ‘off the books’ by dealing in cash and not giving receipts; and
• Hiding money, shares, or other assets in an offshore bank account (‘offshore tax evasion’).

Foreign tax evasion means evading tax in a foreign country, provided that conduct is an offence in that country and would be a criminal offence if committed in the UK. As with tax evasion, the element of fraud means there must be deliberate action, or omission with dishonest intent.

Tax evasion facilitation (assisting/enabling) means being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax (whether UK tax or tax in a foreign country) by another person, or aiding, abetting, counselling, or procuring the commission of that offence. Tax evasion facilitation is a criminal offence, where it is done deliberately and dishonestly. That can apply even if you are outside the UK at the time. Facilitating the evasion of foreign tax may, likewise, be a crime. It is not necessary for your client to be convicted for you to face conviction.

Tax avoidance is quite different from tax evasion and involves the operation of a policy, scheme or arrangement that involves bending the tax rules to try to gain a tax advantage which Parliament had not intended. It often involves contrived, artificial transactions that serve little or no purpose other than to reduce the amount of tax owed and seldom achieve the tax savings claimed – whilst it may be operating within the law, it is not within the spirit of the law.

HMRC takes a very dim view on tax avoidance – they may require tax which is trying to be avoided to be paid upfront, they may take legal action for payment of tax owed or treat individuals as a high-risk taxpayer, which would involve all tax affairs being closely inspected in future.

Examples of tax avoidance include:

• Loan schemes operated by companies where directors receive their income as directors’ loans and then do not repay such loans to the company or write them off at the year-end.
• Contractor loan schemes/disguised remuneration arrangements where the contractor is paid in the form of ‘tax-free’ loans from a trust or company which are never expected to be repaid; and
• Employee Benefit Trusts adopted solely for the purpose of avoiding tax.

Legitimate tax planning on the other hand is about following the letter and the spirit of the law and taking advantage of tax breaks in a way that Parliament intended. Examples include:

• Saving money in a tax-exempt ISA to avoid income tax on the interest.
• Saving for retirement by making contributions to a pension scheme and
• Setting up a trust to reduce liability to inheritance tax.

Other duties

SRA Standards and Regulations/CLC of Conduct: tax evasion is not compatible with the regulatory requirements to act with honesty, integrity, and in a way that upholds public trust.  duty to comply with applicable laws and report any suspicions of regulatory breaches by others, including acts by the firm or colleagues.

Reporting tax avoidance schemes: even though tax avoidance schemes are legal, they must be reported to HMRC. The Disclosure of Tax Avoidance Schemes (‘DOTAS’) regime applies to those promoting or marketing such schemes. Please speak to the COLP about suspected tax avoidance and they can report the scheme if necessary.

Mandatory Disclosure Rules: it is important to consider any further obligation under the Mandatory Disclosure Rules (‘MDR’), which replaced the DAC6 regime. This may entail reportable arrangements such as opaque offshore structures. Please refer to the COLP if you have further questions.

3. What we expect of you, and why

 Your work for the firm may present you with opportunities to facilitate tax evasion by clients or others. We expect you to resist any temptation to engage in such behaviour and to report any improper behaviour by others.

If you were to facilitate tax evasion, you would commit a serious criminal offence. You would also leave yourself open to professional sanctions and internal disciplinary action. Moreover, you could expose the firm to liability.

4. Your duty to report

It is not enough merely to avoid personally facilitating tax evasion. As with all aspects of your professional work, you should be open, report any concerns about questionable behaviour, past or present, and, if in doubt, seek guidance.

It is important to understand your client’s motivations and question/investigate anything that seems suspicious. If someone within or outside the firm suggests anything which might be regarded as tax evasion or foreign tax evasion or you have suspicions relating to their tax affairs/they are being evasive on the topic, it is vital that you report it to the COLP as soon as possible. They will be able to advise on next steps including external reporting and handling the relationship with the client, which may include ceasing to act.

5. Whistle-blower protection: Our promise to you

 This firm has a whistleblowing policy that protects you so you can report concerns in good faith without worrying about retribution. See our Whistleblowing Policy for further details regarding your rights as a whistle-blower and for guidance on reporting suspicious activity.

6. Vulnerable areas of practice

The risk assessment referred to above identified the following practice areas which are considered to be the most vulnerable to the risk of facilitating of tax evasion at the firm.

Client demographic risks

• acting for clients who have more complex ownership structures.

Service risks

• complicated financial or property transactions.
• funds or assets that may be sent to or received from jurisdictions, especially offshore, that have no apparent logical or business association with the client.
• requests to change the entity to be billed where no advice or services have been provided to such entity.

Retainer risks

• no clear commercial rationale for the relevant transaction.
• handling funds where there is no underlying transaction.
• clients introduced by third parties.
• high value or multi-party transactions.
• transactions involving payment of stamp duty land tax.
• clients seeking undue levels of secrecy within a transaction.
• clients’ origin of wealth and/or source of funds cannot be easily verified.
• clients who are unwilling to provide identity details of beneficial owners.
• where an Associated Person (other than an employee) is involved.
• clients who have been rejected by other law firms.
• clients who have been subject to adverse media/publicity.

7. Examples

The following are non-exhaustive examples where opportunities to facilitate tax evasion might arise within our practice areas, and to which you should be alert:

In any practice area

• Delivering a misleading or inaccurate bill which enables a client to evade tax. For example, billing a company for work actually done for its directors or shareholders to assist clients to claim a tax deduction to which they are not entitled.

Property

• Preparing documents which misstate the price of property to enable a client to evade stamp duty land tax or capital gains tax.
• Assisting in property being bought using nominees or other structures so that a client may illegally avoid tax.

Corporate

• Assisting in creating corporate or trust structures designed to conceal a client’s taxable income or assets.
• Referring clients to third parties in tax havens to set up accounts or structures which you know are to facilitate tax evasion, rather than tax avoidance.
• Using side letters so that aspects of a transaction with taxable effects are not apparent from reading the main agreement.

Wills and Probate

• Assisting in creating trust or other structures designed to conceal a client’s taxable income or assets.
• Giving clients advice on how to make lifetime transfers in ways which HMRC will find difficult to detect.
• Preparing documents which misstate the value of an estate in order to avoid inheritance tax.

Family Law

• Helping a client to put forward figures which you know to be false will involve a number of offences, possibly including conspiracy to pervert the course of justice and tax evasion offences.
• Clients who have been ordered to disclose their earnings in connection with family proceedings may tell you that they have committed tax evasion in the past. That information will normally be privileged and is not normally reportable under money laundering law. However, in such cases discuss the matter with Timothy Halliday (MLRO/COLP) to ensure that your involvement in the case will not create any liabilities or concerns.

8.     Training

Senior Management and all fee earners are required to undergo annual training on anti-facilitating tax evasion.

9. Review of this policy

This policy will be reviewed at least annually by Timothy Halliday (MLRO/COLP) and reviews will take into consideration updated guidance published by the Government and/or the Law Society.

January 2026