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Agency tax bills show the Criminal Finances Act has teeth!

Leading umbrella industry body, the Freelancer and Contractor Services Association, FCSA, has warned recruitment agencies that accepting incentive payments from umbrella companies could come back to bite them. The FCSA have had reports that some recruitment consultants have started receiving bills from HMRC for unpaid tax on incentive payments.

Failure to prevent tax evasion - the reality

If a recruitment consultant receives payment from an umbrella company and no tax is paid on this income, HMRC will pursue the unpaid tax. This applies to cash, vouchers or any other benefits in kind - all are taxable. Furthermore, a failure by recruitment agencies to declare what their consultants received may breach the new corporate offence of failing to prevent tax evasion, introduced within the Criminal Finance Act in September 2017. Most worryingly for recruiters, is that the agency can still be liable even if their directors and senior members were not involved, or even not aware of the incentive payments.

Always seek FCSA accreditation

Commenting on the reported recent tax demands, FCSA Chief Executive Julia Kermode said: “Those who have been targeted so far are likely to be just the tip of the iceberg, which should be a concern for any recruitment agencies reading this." "In order to protect supply chain partners from an unexpected tax bill, we require FCSA Accredited Members to ensure that appropriate tax is paid on any incentives paid to recruitment businesses or their staff. This yet another reason why an increasing number of agencies require FCSA accreditation for their PSLs.”

Find out more and mitigate your risk

Recruitment businesses can mitigate their risk under the Criminal Finances Act by only choosing umbrella and accounting partners who are FCSA Accredited Members and by having appropriate policies and procedures in place. Knowledge is power, so find out more by downloading our free guide to the Criminal Finances Act by clicking the link below or contact us to find out how we can help.