Criminal Facilitation of Tax Evasion Policy

1. Policy statement

1.1 The 17넜믿 Group, including its overseas activities, (“the University”) is dedicated to conducting its academic, administrative and commercial operations in an honest, law-abiding and ethical manner. The University takes a zero-tolerance approach to the facilitation of tax evasion, whether under UK law or under the law of any foreign country, and will not tolerate acts of criminal facilitation of tax evasion by its staff, subcontractors or any other of its associates anywhere in the world. It is committed to acting professionally, fairly and with integrity in all of its dealings and relationships wherever it operates, and to implementing and enforcing effective systems to counter tax evasion facilitation.

1.2 The University takes its legal responsibilities very seriously. It will uphold all laws relevant to countering tax evasion in all the jurisdictions in which it operates, including the Criminal Finances Act 2017.

2. About this policy

2.1 The purpose of this policy is to:

(a) set out the University’s responsibilities, and the responsibilities of those working for it, whether as an officer, employee, worker, subcontractor, agent or in any other capacity, in observing and upholding its position on preventing the criminal facilitation of tax evasion; and

(b) provide information and guidance to those working for the University on how to recognise and avoid tax evasion.

2.2 This policy applies alongside the University’s Financial Regulations, Anti-Bribery and Corruption Policy and Fraud Policy.

2.3 This policy does not form part of any contract of employment or other contract to provide services, and the University may amend it at any time.

3. Who does this policy apply to?

3.1 This policy applies to all persons working for the University or on its behalf in any capacity, including employees at all levels, directors, officers, agency workers, seconded workers, volunteers, interns, agents, contractors, external consultants, third-party representatives and business partners, sponsors, or any other person associated with the University, wherever located.

3.2 In this policy, third party means any individual or organisation that an individual comes into contact with during the course of their work for the University, and includes actual and potential clients, customers, suppliers, distributors, business contacts, agents, advisers, and government and public bodies, including their advisers, representatives and officials, politicians, and political parties.

4. Who is responsible for the policy?

4.1 The University Executive Board has overall responsibility for the effective operation of this policy but has delegated responsibility for overseeing its implementation to the Director of Finance. General queries regarding this policy, the Criminal Finances Act 2017 should be directed to the Director of Finance or to the Tax Team at vat@reading.ac.uk in the first instance.

5. Tax Evasion Facilitation

5.1 It is an offence for an individual to facilitate tax evasion (as defined and set out in Annex 1).

5.2 Under Part 3 of the Criminal Finances Act 2017, a separate corporate criminal offence of failure to prevent facilitation of tax evasion (the “corporate offence”) will be automatically committed if the University fails to prevent its associated persons facilitating tax evasion, unless it can demonstrate that it had reasonable procedures in place to prevent that facilitation. The University, if found guilty of this offence, could face criminal sanctions including an unlimited fine, as well as exclusion from tendering for public contracts and damage to its reputation.

Examples of situations where Associated Persons could be considered to be assisting Third Parties to commit criminal tax evasion can be found in Annex 1 attached to this document.

5.3 In this policy, all references to tax include National Insurance contributions (and their equivalents in any non-UK jurisdiction).

6. Identifying risks of tax evasion facilitation

6.1 The University has reviewed its risks and associated processes and procedures to ensure that all appropriate steps are taken to prevent facilitation of tax evasion. It maintains a register of possible risks of facilitation of tax evasion by its Associated Persons, as well as listing controls to mitigate those risks, and any actions required to improve those controls. This register will be regularly reviewed and updated, as and when required.

7. What Associated Persons must not do

7.1 It is not acceptable for Associated Persons (or someone on their behalf) to:

(a) engage in any form of facilitating tax evasion or foreign tax evasion;

(b) aid, abet, counsel or procure the commission of a tax evasion offence or foreign tax evasion offence by another person;

(c) fail to promptly report any request or demand from any third party to facilitate the fraudulent evasion of tax (whether UK tax or tax in a foreign country), or any suspected fraudulent evasion of tax (whether UK tax or tax in a foreign country) by another person, in accordance with this policy

(d) engage in any other activity that might lead to a breach of this policy; or

(e) threaten or retaliate against another individual who has refused to commit a tax evasion offence or a foreign tax evasion offence or who has raised concerns under this policy.

8. Associated Persons responsibilities

8.1 Associated Persons must ensure that they read, understand and comply with this policy.

8.2 The prevention, detection and reporting of tax evasion and foreign tax evasion are the responsibility of all those working for the University or under the University’s control. Associated Persons are required to avoid any activity that might lead to, or suggest, a breach of this policy.

8.3 Associated Persons must notify

Their line manager (for employees)
Their contact at the University (for all other Associated Persons)
A member of the tax team (vat@reading.ac.uk)
The Director of Finance
The Chief Legal Officer

as soon as possible if they believe or suspect that a conflict with this policy has occurred, or may occur in the future.

9. How to raise a concern

9.1 Associated Persons are encouraged to raise concerns about any issue or suspicion of tax evasion or foreign tax evasion at the earliest possible stage.

9.2 Should Associated Persons become aware of any fraudulent evasion of tax (whether UK tax or tax in a foreign country) by another person in the course of their work, or are asked to assist another person in their fraudulent evasion of tax (whether directly or indirectly), or if they believe or suspect that any fraudulent evasion of tax has occurred or may occur, whether in respect to UK tax or tax in a foreign country, they must report it to:

Their line manager (for employees)
Their contact at the University (for all other Associated Persons)
A member of the Tax team (vat@reading.ac.uk)
The Director of Finance
The Chief Legal Officer

Employees may also raise concerns under the whistleblowing procedures as set out in the University’s Public Interest Disclosure Policy.

9.3 If Associated Persons are unsure about whether a particular act constitutes tax evasion or foreign tax evasion, they should raise it with

Their line manager (for employees)
Their contact at the University (for all other Associated Persons)
A member of the Tax team (vat@reading.ac.uk)
The Director of Finance
The Chief Legal Officer

as soon as possible. The corporate offence is only committed where an individual deliberately and dishonestly takes action to facilitate the tax evasion or foreign tax evasion. If that individual does not take that action, then the offence is not made out. However, a deliberate failure to report suspected tax evasion or foreign tax evasion, or ignoring suspicious activity, could amount to criminal facilitation of tax evasion.

10. Protection

10.1 Individuals who raise concerns or report another's wrongdoing are sometimes worried about facing possible repercussions. The University aims to encourage openness and will support anyone who raises genuine concerns in good faith under this policy, even if they turn out to be mistaken.

10.2 The University is committed to ensuring no one suffers any detrimental treatment as a result of:

(a) refusing to take part in, be concerned in or facilitate tax evasion or foreign tax evasion by another person;

(b) refusing to aid, abet, counsel or procure the commission of a tax evasion offence or a foreign tax evasion offence by another person; or

(c) reporting in good faith their suspicion that an actual or potential tax evasion offence or foreign tax evasion offence has taken place, or may take place in the future.

Detrimental treatment includes dismissal, disciplinary action, threats or other unfavourable treatment connected with raising a concern. If an individual believes that they have suffered any of this treatment, they should inform

Their line manager (for employees)
A HR Partner (for employees)
Their contact at the University (for all other Associated Persons)

immediately. If none of these contacts are appropriate, they should inform the Chief Legal Officer immediately.

10.3 If the matter is not remedied, and the individual is an employee, they should raise it formally using our Grievance Procedure.

11. Training and communication

11.1 Training on this policy forms part of the induction process for all individuals who work for the University , and regular training will be provided as necessary. That training may form part of wider financial crime detection and prevention training.

11.2 The University ensures that training on this policy is offered to those employees, workers and associated persons who have been identified as being at risk of exposure to criminal tax evasion.

11.3 Our zero-tolerance approach to tax evasion and foreign tax evasion must be communicated to all suppliers, contractors and business partners at the outset of our business relationship with them and as appropriate after that.

12. Publication of Guidance

12.1 The University regularly reviews guidance and legislation in relation to CFA 2017 to ensure it is maintaining an appropriate CFA 2017 policy. Within that review, it will consider appropriate training for employees.

13. Breaches of this policy

13.1 Any employee who breaches this policy may face disciplinary action, which could result in dismissal for misconduct or gross misconduct.

13.2 The University may terminate its relationship with other individuals and organisations working on its behalf if they breach this policy.

14. Potential risk scenarios: "red flags"

The following is a list of possible red flags that may arise during the course of working for the University and which may raise concerns related to tax evasion or foreign tax evasion. The list is not intended to be exhaustive and is for illustrative purposes only.

If an Associated Person encounters any of these red flags while working for the University, they must report them promptly to:

Their line manager (for employees)
Their contact at the University (for all other Associated Persons)
A member of the Tax team (vat@reading.ac.uk)
The Director of Finance
The Chief Legal Officer

or by the procedure set out in the Whistleblowing policy:

(a) An Associated Person becomes aware, in the course of their work, that a third party has:

(i) made or intends to make a false statement relating to tax;

(ii) failed to disclose income or gains to, or to register with, HMRC (or the equivalent authority in any relevant non-UK jurisdiction);

(iii) delivered or intends to deliver a false document relating to tax; or

(iv) set up or intends to set up a structure to try to hide income, gains or assets from a tax authority.

(b) An Associated Person becomes 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;

(c) a third-party requests payment in cash or refuses to sign a formal commission or fee agreement, or to provide an invoice or receipt for a payment made;

(d) An Associated Person becomes aware, in the course of their work, that a third party working for the University as an employee asks to be treated as a self-employed contractor, but without any material changes to their working conditions;

(e) a supplier or other subcontractor is paid gross when they should have been paid net, under a scheme such as the Construction Industry Scheme;

(f) a third party requests that payment is made to a country or geographic location different from where the third party resides or conducts business;

(g) a third party to whom the University has provided services requests that their invoice is addressed to a different entity, where the University did not provide services to that entity directly;

(h) a third party to whom the University has provided services asks the University to change the description of services rendered on an invoice in a way that seems designed to obscure the nature of the services provided;

(i) An Associated Person receives an invoice from a third party that appears to be non-standard or customised;

(j) a third party insists on the use of side letters or refuses to put terms agreed in writing or asks for contracts or other documentation to be backdated;

(k) An Associated Person notices that the University have been invoiced for a commission or fee payment that appears too large or too small, given the service stated to have been provided;

(l) 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 University;

The start date for this policy was 30th September 2017.

Version	Section	Keeper	Reviewed	Approving Authority	Approval Date	Next Review
1.0	Finance	Chief Financial Officer	Annually	UEB		August 2020
2.0	Finance	Chief Financial Officer	3 Yearly	UEB	Nov 21	November 2024
3.0	Finance	Chief Financial Officer	3 Yearly	CUPP	Jan 2025	January 2028

ANNEX 1 – DEFINITIONS

Associated Person

An Associated Person is any person that provides services for or on behalf of a corporate entity or partnership; and includes employees acting in the capacity of an employee, agents acting in the capacity of an agent, and any other person who performs services for or on behalf of the corporate entity who is acting in the capacity of a person performing such services.
For the purpose of this Policy, “Associated Persons” includes the University’s officers, employees, workers, agents, sub-contractors, and other people or organisations that provide services for or on the University’s behalf.

Employee

An employee is an individual who has entered into and works under a contract of employment with the 17넜믿 group.

Failure to Prevent Facilitation of Tax Evasion or Foreign Tax Evasion (the “Corporate Offence”)

Under the Criminal Finances Act 2017 corporate entities and partnerships will be held criminally liable if tax evasion or foreign tax evasion is facilitated by a person acting in the capacity of an “Associated Person” to that body. The offence requires that the Associated Person deliberately and dishonestly takes action to facilitate the tax evasion, but the company does not have to act deliberately and dishonestly; the fact that the associated person has done so creates the liability for the company.

Tax Evasion

Tax evasion is the offence of cheating the public revenue or fraudulently evading UK tax, and is a criminal offence. The offence requires an element of fraud, which means there must be deliberate action or omission with dishonest intent. Tax evasion is not the same as tax avoidance or tax planning. Tax evasion involves deliberate and dishonest conduct, whilst tax avoidance and tax planning are not illegal and involve taking steps, within the law, to minimise tax payable or maximise tax reliefs.

Tax Evasion Facilitation

Tax evasion facilitation 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.

Foreign 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.

ANNEX 2 – EXAMPLES OF AIDING AND ABETTING CRIMINAL TAX EVASION

For illustration purposes, examples are given below of when an employee or associate of the 17넜믿 (UoR) might themselves be guilty of committing an offence of criminal tax evasion, and thus also the UoR itself

1) Deliberately entering false or misleading information on the Employment Status Questionnaire:

A Supplier wishes to be treated as a self-employed contractor so that payments made to them by the University are gross, and they can evade paying appropriate income tax and national insurance liabilities.

Knowing this, a UoR employee helps the Supplier to evade tax by providing false information on the Employment Status Questionnaire used by the Tax Team to assess whether such a Supplier may be considered as self-employed for tax purposes.

By supplying false information in this way, the UoR employee is committing a criminal offence as they have assisted a third party in criminal tax evasion.

2) Colluding with another University to artificially document services supplied to that University as outside the scope of VAT

University X has asked a Research Team based at the UoR to supply data analysis services to them in respect of some grant funding they are receiving, where the grant funding is outside the scope of VAT. As such University X is unable to recover any VAT UoR might charge them for the data analysis service.

University X asks the 17넜믿 to state falsely in the Agreement between them, that the 2 Universities are acting as Collaborators on the project, (when this is contrary to what is actually happening in practice). The UoR team conclude that University X are asking this to evade paying VAT but go ahead and sign the document regardless without making any further enquiries or seeking help internally.

The University research employees are committing a criminal offence as they have agreed to sign an Agreement, where they know the information provided is false and was done so that University X could evade paying the associated VAT liability on their services.

3) Helping an overseas education establishment avoid overseas tax on payments they make to UoR

There is an Agreement in place between UoR and an education establishment overseas - whereby UoR is supplying teaching staff to the overseas establishment for a particular programme. The Agreement between the parties’ states that the overseas establishment should bear the cost of any local withholding taxes that may be due on payments made for this service.

The overseas establishment tells a UoR employee, that if instead of describing the services correctly as ‘teaching services’ on the invoice, they are described as something else, (for example marketing services), they won’t have to pay the withholding tax to their own overseas tax authority. The UoR employee agrees to do this.

The UoR employee has committed a criminal act by putting false information on the sales invoice, albeit that the tax evaded is not UK tax but overseas tax.

4) Helping another employee or third party claim a payment due to them as an expense rather than another type of payment which would be subject to tax

A UoR Head of School agrees to allow one of their members of staff to claim home to University (place of work) mileage through an expense form. However, knowing that is against University policy and to help their member of staff evade paying tax, which is properly due on the claim, they allow the staff member to describe the travel as being for fictitious journeys away from the office.

The Head of School is knowingly allowing a member of staff provide false information on their expense claim to evade tax and is committing a criminal offence of assisting criminal tax evasion.