Agencies are already seeing an impact from the Criminal Finances Act: here’s how to protect your firm

criminal finances act protect your recruitment firm

8th May 2018

We’ve mentioned in numerous blogs recently that recruitment agency owners – and, indeed, their staff – need to be taking steps to protect their firm from possible investigations in relation to the Criminal Finances Act 2017. As we’ve continued in our attempts to encourage action from the 43% of recruiters that are currently unaware of the possible impact of the Act on their agency, the latest news elsewhere is demonstrating the real risks this legislation presents.

Contractor agencies being targeted

According to recent reports contractor recruitment firms are beginning to receive demands from HM Revenue & Customs, with the Freelancer and Contractor Services Association (FCSA) suggesting that these information requests are in relation to ‘incentive’ payments made to contractors from umbrella companies on which no tax appears to have been paid. As these article go on to outline, for an agency’s owners and managers, claiming to be unaware of any incentive payments or having no involvement in these schemes doesn’t remove liability.

In its statement, the FCSA clarified that “if your staff accept monies, vouchers or any other benefits in kind from an umbrella or accountancy provider it should be treated as taxable income. In order to protect supply chain partners from an unexpected tax bill… appropriate tax [must be] paid on any incentives paid to recruitment businesses or their staff.”

How to protect your firm

As we covered in more detail last month, there are a number of ways to better ensure you create an efficient compliance programme, including:

  • Planning ahead of placements to allow greater time for compliance checks
  • Use the right resources, including external experts, to ensure there are no possible cracks in processes
  • Take time to educate the rest of the team on the impact the CFA can have on the agency and, subsequently, them as well, particularly around incentives.

As experts in international contractor management solutions we fully recognise that navigating complex legislation such as the Criminal Finances Act can be a recruiter’s worst nightmare, so why not leave this to the specialists?

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