Recruiters Held to Account for Facilitating Tax Evasion
Welcome to 2017. From this month, HMRC and foreign tax offices can hold recruiters to account for seemingly “enabling” or “turning a blind eye” to tax evasion by their placements. As you will recall from my recent article in TEAM TALK, the government is introducing a new corporate criminal offence of “failing toprevent the facilitation of tax evasion”.
Jane Ellison, Financial Secretary to the Treasury, said: “Tax evasion is a crime and as a government, we have led reform of the international tax system to root it out.”
You will be surprised to learn there are still recruitment businesses more focused on driving commission fees from international ‘umbrellas’ and so-called ‘management companies’ rather than carrying out even rudimentary due diligence checks on them. Those agencies are placing short-term gain above solid attention to placement tax compliance.
Purely testing intermediaries with “how much do you charge” and “what’s the net retention” shows incredible naivety.
Purely relying on a candidate’s validation is similarly dangerous.
Incentives ranging from formalised rewards to ‘cash-in-brown-envelopes’ could now fall foul of money laundering and anti-corruption laws – in the UK and increasingly across Europe.
Allowing intermediaries into contract chains without appropriate pre-checks widens the risk for agency owners.
Without evidence from active due diligence protocols, agencies risk being held liable if an individual acting on its behalf (such as a sales consultant acting innocently or otherwise) is deemed by the authorities to have helped a third party (such as a contractor) evade tax. Previously, there needed to be proof that the board of directors were aware and involved in facilitating tax evasion.
This unpalatable risk now sits firmly at the door of agency owners. In addition to an embarrassing criminal record, fines will be imposed of up to 100% of the evaded tax or GBP 3,000 – whichever is the highest.
Because recruitment is an industry prone to image protection, be aware HMRC now has the power to publicly ‘name and shame’ – probably the authorities’ strongest line of attack.
If you need assistance preparing for the new legislation, we are here to help.
As a reliable and risk-averse provider of fully-compliant ‘solutions’ for TEAM Members’ contractor and interim placements across Europe and in other key countries, ItsInternational works closely with locally-regulated service providers and locally-registered employers-of-record to ensure your valuable placements are structured to operate your assignments within the laws of their countries of work. This is transparently driven by our local network in unison with local tax offices. As a TEAM Member, if you are either placing or aspiring to place consultants or interims abroad on fixed-term assignments, you can benefit from accessing the TEAM INTERNATIONAL HELPLINE – a free service provided by ItsInternational’s Central London offices exclusively for you.
Either call 0044 (0)20 7477 2660 for your complimentary consultation or email us at TEAM@itsinternational.ltd.uk
For more details, visit www.jobsatteam.com/Team-Service-Provider/its-international/