31st December 2018
As we bid goodbye to 2018, I’m sure many of us hope that next year won’t be as chaotic as the one that’s just passed! However, with Brexit negotiations up in the air, and a potential no-deal scenario looming ever closer, it’s safe to say that compliance in 2019 will present a number of challenges. Whilst predictions can never reliably be made, whatever agreement we come to is going present fresh compliance issues for agencies and contractors. However, this shouldn’t stop businesses from profiting from the myriad of economies worldwide looking for contract talent. Agencies can’t afford to put their head in the sand, and by taking action now, they will be able to embrace the New Year and anything thrown their way.
So, what do you need to know?
The Criminal Finances Act 2017
This legislation is one that most firms are familiar with, but unfortunately, many still don’t recognise the potential impact this could have on their agency. The CFA will hold directors and owners of UK companies criminally liable for facilitating tax evasion, whether they were aware of it or not. Ignorance will not be considered a defence. For agencies placing contractors abroad, the mammoth task of keeping up with everything that recruiters and associated contractors are doing makes the likelihood of an accidental breach of the law causing serious ramifications to your company a lot higher. As the only defence from allegations is to be able to demonstrate that you have sufficient preventative procedures in place, having a watertight and up to date compliance system is business imperative.
Authorities are embracing digital technology in the fight against tax evasion. We’ve already discussed how HMRC’s ‘Connect’, Blockchain, big data and social media are all being used to claw back lost revenues, with Connect in particular credited with bringing in an extra £4bn for HMRC. With advances in technology showing no sign of slowing going into 2019, tax authorities will be more effective at spotting discrepancies than ever before.
Under current EU rules, A1 certificates exonerate contractors from contributing to the social insurance system in the country in which they are going to work. However, France, Germany and the UK have all ceased the issuance of A1 certificates exceeding 29th March 2019. This means that agencies placing contractors internationally will face a far more complex and uncertain compliance landscape. In this climate, firms reliant on A1 solutions will have to be extremely cautious about whether the solutions they are using are still legal before and following our withdrawal from the union. With other European countries looking to follow suit, seeking professional help as soon as possible in order to mitigate potential damage is highly recommended.
Compliance in 2019: a global movement
It’s been clear that a global movement towards cracking down on tax fraud has been gathering pace for a number of years now. With the introduction of schemes such as the Common Reporting Standards enabling unprecedented levels of co-operation between nations, authorities are becoming more effective working together at collecting tax. Just last week, the G20 pledged to ‘continue to work for a globally fair, sustainable, and modern international tax system.’ We have been very vocal about this movement and recruiters can certainly expect it to gather momentum going into 2019.
You can’t do it alone
Ultimately, as international tax regulation becomes ever-more complex, it is vital that recruiters don’t try to take on the burden of compliance by themselves. Aside from the niche skill set required, the landscape is so full of constant changes that attempting to stay ahead of the latest developments is almost impossible without diverting serious time and effort away from other crucial business activity. Compliance in 2019 is undoubtedly going to be challenging, and the only certainty is change. However, it shouldn’t all be doom and gloom. By ensuring your solutions are fully compliant now, you can enter 2019 confident in achieving your business objectives. Happy New Year!
Contact us today: