24th December 2019
There’s no denying that 2019 has been an interesting year for recruitment agencies that place contractors abroad, as compliance in the sector has become incredibly complex. GDPR, IR35 and the Criminal Finances Act 2017 are all making it difficult for agencies to ensure they – and their contractors – abide by the relevant legislation both home and away.
So, in order to make sure recruitment agencies can successfully navigate the world of contractor compliance in 2020 – here’s a roundup of some of the key developments over the last 12 months.
2020: Recruitment agencies can’t take contractor compliance lightly
Throughout 2019 contractor compliance across the globe remained a hot topic. Recruitment agencies will need to be aware that this is set to continue into 2020.
Here’s just a small sample of developments to take note of:
The Criminal Finances Act 2017
Towards the end of the year, reports emerged that HMRC was stepping up the use of its new powers to raid premises and inspect company records in order to crackdown on suspected VAT and contractor tax fraud. These actions were carried out due to the ‘corporate criminal offence’ featured in the Criminal Finances Act 2017, which applies to the evasion of UK and foreign taxes. Under the law, liability will be attributed to companies and partnerships where a business or its employees ‘fail to prevent’ a ‘representative’ facilitating tax evasion.
J5 compliance crackdown
The J5, made up of representatives from the US, Australia, Canada, Netherlands and the United Kingdom, has been working to develop ways to deal with tax crimes, particularly involving cryptocurrency.
Most recently, the organisation conducted an event named, the ‘The Challenge’, where tax authorities gathered to discuss the latest methods of pursuing non-compliance. Using various analytical tools, experts from of each country split into teams with the goal of generating leads and finding tax offenders.
The EU whistle-blower directive
EU-wide protections for whistle-blowers who report breaches of EU law have now been adopted by the European Council. The new directive requires companies with more than 50 employees or with an annual turnover of €10 million or more to set up internal reporting procedures. It will also apply to regional administrations and municipalities with 10,000 inhabitants or more.
The OECD, the leading organisation in boosting global tax and compliance has hailed the ‘unprecedented successes’ of its inter-connected approach to tax collection. Due to increased data sharing alone, the organisation has helped countries recover nearly £7.5 billion of additional tax revenue.
The risks are growing
What’s been clear for recruitment agencies throughout the last 12 months is that contractor compliance has become increasingly complex – and 2020 will be no exception. However, while there are greater risks, the contracting arena presents such fantastic commercial opportunities that it simply can’t remain untapped for fear of possible repercussions.
So, how can you balance global employment law and tax requirements with your firm’s need for international growth? While some build an in-house compliance function, this requires increased headcount, continuous training, and limits the scope of expansion to destinations that these individuals have dealt with before.
Therefore, for those looking to expand without this drain on resources, turning to a company with a team of highly-trained experts with experience across more than seventy countries is certainly a more cost-effective way to profit from international markets.
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