{"id":2201,"date":"2017-09-11T09:27:49","date_gmt":"2017-09-11T08:27:49","guid":{"rendered":"http:\/\/liquidfriday.co.uk\/?p=2201"},"modified":"2017-09-11T09:27:49","modified_gmt":"2017-09-11T08:27:49","slug":"failure-prevent-tax-evasion","status":"publish","type":"post","link":"https:\/\/www.liquidfriday.co.uk\/failure-prevent-tax-evasion\/","title":{"rendered":"Recruiters and the facilitation of tax evasion – 4 steps to reduce risk"},"content":{"rendered":"

The Criminal Finances Act 2017 comes into effect on 30th September and introduces new rules to make it easier for HMRC to convict organisations who help, or fail to prevent, the facilitation of tax evasion.<\/p>\n

This has the potential to have a significant impact on the contractor recruitment industry. Corporate bodies, including recruitment agencies, can now be held criminally accountable under a new offence of failure to prevent the facilitation of tax evasion.<\/p>\n

Consequences this could have in a recruitment scenario<\/h2>\n

Example:<\/strong><\/p>\n

A recruitment consultant directs a candidate to the services of a payroll provider with the reasonable expectation that correct levels of tax are not being paid to HMRC (such as an Employee Loan Scheme). This is an act of facilitating tax evasion.<\/p>\n

Even if the agency management is not involved or even aware that this act has occurred, that is no defence. The agency could still be found guilty of preventing the facilitation of tax evasion. This new offence carries unlimited fines and a possible custodial sentence.<\/p>\n

The only defence from liability is for the recruitment business to verify that they have reasonable measures in place to prevent facilitation or that in the circumstances it would have been unreasonable or unrealistic to expect such measures to be taken.<\/p>\n

4 steps to reduce your agency\u2019s risk<\/h2>\n

The Criminal Finances Act effectively makes recruitment agency directors responsible for ensuring that no-one associated with their business facilitates tax evasion.
\nDon\u2019t forget – management being removed from or unaware of breaches is not considered a defence.<\/p>\n

Here are 4 steps recruiters should consider taking to mitigate their risk under the new rules:<\/p>\n

1) Risk assessment<\/strong>
\nHMRC suggests that companies undertake risk assessments of their internal processes and procedures to identify any practices that could potentially be used to facilitate tax evasion.
\nThese may include instances where staff are less than open about particular client or supplier relationships.<\/p>\n

2) Procedures review<\/strong>
\nYour risk analysis will show any areas of your internal procedures and processes which need to be updated or fortified. These may include:<\/p>\n