29th May 2018
Here at 6CATS International we’ve spent many months spreading the word about the Criminal Finances Act 2017 (CFA). We fully recognise that this legislation has the potential to negatively impact a vast number of agency owners in the near future and we’re incredibly keen to help firms avoid potential penalties as a result of non-compliance.
Agency owners are at risk
While we have certainly been urging senior teams to be mindful of what the CFA means to them, our conversations with individuals from across the industry have revealed a worrying lack of awareness that quite simply needs to be addressed.
As we’ve mentioned in previous posts, claiming to be unaware of the fraudulent activity of associated parties will not be considered a defence in the eyes of the law, meaning that agency owners can – and will – face investigations as a direct result of contractor or partner non-compliance. In fact, there are a number of behaviours that are in direct breach of the Act that appear to still be commonplace. Here are just a few.
The common mistakes
In the first instance, the use of split-payroll – where an individual’s pay is divided between their local and home-country currencies – is non-compliant under the CFA. Using any loopholes that will enable a professional to increase their take-home pay is also in breach of the Act and will see agency owners facing questions if their team has failed to notify them that a contractor or supplier is involved in such activity.
Any agencies that use Contractor Management companies should also be aware that risks can’t be offloaded to the supplier. Many of these companies are using non-compliant solutions that would see the agency in breach of the CFA unless they can demonstrate that adequate procedures were put in place to prevent the facilitation of tax evasion.
What we’ve certainly found in many of these instances is that agency owners are simply unaware that their suppliers aren’t compliant, but with phase two of the Act making it clear that HMRC has the power to investigate all parties associated with fraud, it is no longer acceptable to rely on the reassurance that a supplier is compliant.
Ensuring the requisite due diligence and checks are carried out is now critical for a recruitment firms’ senior teams. If you’re unsure how the CFA could impact you, contact our team of experts today: