9th April 2020
There’s no doubt that COVID-19 has ushered in unprecedented levels of economic uncertainty across the globe as markets reel from the effects of the global pandemic, and international contracting is clearly no exception.
However, as many industry sectors adapt their processes to the new reality of remote working, the contracting world has had to do the same. When it comes to compliance, this has thrown up a number of added challenges. Here’s what you need to know.
Remote contractor compliance
In order to continue doing business throughout the current lockdown and beyond, more and more expat contractors are now being given the option to continue to deliver or even temporarily start contract services from their home countries remotely rather than in a host country.
With travel restrictions, lockdowns and preventative measures aimed at slowing the spread of COVID-19 potentially set to continue for a number of months, this is likely to become increasingly popular going forward.
The main compliance challenge for the recruitment sector when it comes to remote contactor compliance is that firms will now be dealing with workers who are asking to use alternative models to invoice their services – such as through their home country PSC (or equivalent). This will put recruitment businesses under greater commercial, administration and time pressures to ensure that assignments meet these temporary solutions.
Generally speaking, the place of service will define where taxes are due to be paid. The Criminal Finances Act 2017, which is increasingly being used to target businesses that are non-compliant with tax requirements, will continue to apply wherever the worker delivers their services, regardless . Potential fines for any breaches are unlimited for the owners of the business – and there has been no change to this in light of the COVID-19 pandemic.
Another difficulty for recruitment agencies will be that they will have to adapt contracts to reflect the current COVID-19 enforced locations of service, the change of contractual parties, and factor in that this is a fluid situation pending further legislative clarification.
This means there is a legal obligation for the recruitment business to review the suitability and compliance of the contractors requested invoicing and payment model. It goes without saying that if this is not done, firms could face serious ramifications, so prioritising this is a must at the moment.
How can 6CATSPRO help?
At 6CATSPRO, in order to ensure agencies can continue to do business in this climate, we are offering one-off vetting services to assist firms in reviewing the compliance of prospective models. We can also provide recruitment businesses with a certificate of vetting approval with specific notes on items that need to be considered or monitored in line with the CFA 17 obligations to demonstrate ongoing monitoring and control.
Whilst it might seem like a straightforward procedure to transition a UK PSC checklist (COI, VAT etc.) into another jurisdiction, this is far from the reality, and complacency cannot be allowed to creep in. Many EU countries have highly complex self-employed models and incorporation status for sole traders and PSC’s. For instance, nations such as France and Belgium have multiple sub-options within these models meaning reviewing their suitability can be a complex and time consuming process.
If this wasn’t already a compliance minefield, the local proofs and documentation will all need to be in the local language and format, making the ability to outsource this process to an expert partner an invaluable resource during these challenging times.
Therefore, we encourage any firms with even the slightest uncertainty over remote contractor compliance to get in touch with 6CATSPRO. Our breadth of knowledge of international markets will allow to you transition these assignments quickly and efficiently, and carrying on doing business throughout the current pandemic.
For more information on how 6CATSPRO can help your business during the COVID-19 compliance changes, contact Jonathan Clarke, Director, on:
+44 (0)20 7374 5791
+44 (0)7917 152267