CPA Bulletin

38 CPA Bulletin > August 2024 www.cpa.uk.net LEGAL: 2 In the final days of the last Parliament, the Paternity Leave (Bereavement) Act 2024 received Royal Assent on 24th May. The law gives bereaved working fathers and non-birthing partners the automatic right - from day one when they join the company - to immediate paternity leave if the mother, or a person with whom a child is placed or expected to be placed for adoption passes away. The maximum time off for the father or non- birthing partner is two weeks and will be set to the statutory limit of £184.03 per week. With a change of Government, once the new Secretary of State has been appointed, it will be their decision on when this Act is introduced. When it does, it will cover England & Wales, and Scotland. Paternity Leave (Bereavement) Act 2024 The Economic Crime and Corporate Transparency Act 2023 (ECCTA) came into effect earlier this year, with the intention of changing the mind-set of senior management. Large companies which fall into scope - those that fulfil two of the three criteria: turnover of more than £36 million; balance sheet total of more than £18 million; and more than 250 employees - are encouraged towards better fraud prevention practices. Fraud has become the UK’s biggest single crime, accounting for 40% of all reported crimes in England and Wales. However, this legislation is looking at companies which ‘fail to prevent fraud’, and as a result of that offence, will make large companies criminally liable for the acts of a person or persons associated with that company, where they (the individuals) commit economic crime for the organisation’s benefit, or for the benefit of any person the associated person provides services on behalf of the organisation, such as a customer. To be clear, an ‘Associated persons’ covers a broad spectrum, and includes include employees, agents, subsidiaries, and any other person performing services for or on behalf of the organisation. This definition may also extend to suppliers when they provide ancillary services, and to agents, distributors, advisors, brokers, contractors, consultants, and joint venture partners. The ‘benefit’ must be linked to the organisation the associated person is working or providing services for, or on behalf of, or another group company, customer, or clients of the organisation. The legislation is aimed at preventing large-scale financial collapses which have occurred before, such as Carillion, which had implications across the construction sector and beyond. As a result of Carillion’s collapse in 2018, the UK’s Financial Conduct Authority (FCA) fined three Carillion directors who were accused of publishing false information on the company’s financial health which misled the company’s investors, as well as other stakeholders. Companies should consider reviewing their policies to help identify potential risks of fraud, and where necessary, develop systems to safeguard/mitigate the potential risk, which are then circulated throughout the company, and onward to their supply chain and other stakeholders – if necessary. It is important that companies do not focus purely on financial statements in any review – as highlighted in the Carillion case - but to review non-financial reports which may be relied upon by others. If companies are looking to review their policies/systems, then they should obtain independent qualified advice by speaking with their auditors/legal representatives. Economic Crime and Corporate Transparency Act 2023 HMRC increases criminal cases on tax evasion HMRC have reported that there has been a 49% increase in the number of criminal - not civil - investigations being brought against individuals and companies, when comparing the tax years 2022/23 and 2021/22. Those individuals who are faced with criminal investigations, which is being used more often, and with greater effect in the more serious cases of tax evasion and fraud. As a result of the investigation being ‘criminal’, rather than ‘civil’, the result for the individual, or director(s) of a company can be, if convicted, imprisonment. Those individuals who are being criminally investigated may try and reach an agreement with HMRC, whereby a ‘civil’ sanction is imposed, if full co-operation is given, and all unpaid taxes and any penalties – which can be 200% of the tax owed plus interest - are settled immediately. The individual is not at risk of a prison sentence under civil investigation. Last year, HMRC began nearly 1,100 civil investigations, and it is expected that this figure will grow in 2024/25.