New laws including the Criminal Finances Act 2017 will change the way recruitment agencies refer their candidates to accountancy and payroll providers. This is because the repercussions for referring a candidate to a tax evasion scheme could result in custodial sentences and unlimited fines. Churchill Knight has created a Referral Checklist designed to help recruitment agencies stay compliant and avoid severe penalties.
The Criminal Finances Act 2017 and additional new laws have been introduced by HMRC to try and eliminate the facilitation of tax evasion. It is likely that your recruitment agency refers candidates to accountancy and payroll providers and therefore, you are potentially at risk of breaking the new laws.
You must ensure that accountancy and payroll providers on your Preferred Supplier List (PSL) are compliant and the referrals made by your consultants are done so in accordance with the new laws.
The Churchill Knight referral checklist
To help make this achievable, Churchill Knight has created a 10 question referral checklist. Please answer the following questions honestly.
1. Is everybody at your recruitment agency committed to working in compliance with HMRC’s laws and regulations?
2. Do you have a system in place that allows your consultants to record all of their referrals and any incentives they have received from accountancy and payroll providers?
3. Are referrals by your consultants monitored?
4. Does your internal system allow you to look back at historical referrals, if required?
5. If your consultants receive incentives, are you able to monitor exactly who was involved in the process, what the incentives were, and identify if the basic rate of tax has been paid on them?
6. If your consultants are receiving incentives, are the incentives rational and not what you would consider overly generous and flamboyant (high incentives are more likely to indicate a non-compliant accountancy and payroll provider)?
7. If your consultants receive any incentives, can you be sure they are being received in accordance to your recruitment agency’s referral policy, and, are they being regularly monitored?
8. If the tax has not been paid on incentives received by your consultants (both cash and physical goods), are they aware that they must pay the tax via their self-assessment tax return?
9. Are the accountancy and payroll providers referred to by your consultants fully compliant with HMRC, and able to provide evidence of their compliance (e.g. Professional Passport membership)?
10. If HMRC were to investigate your recruitment agency’s referral processes, can you be certain that everything in your power has been done to ensure referrals are made to compliant accountancy and payroll providers?
If you haven’t answered yes to every question, your organisation and consultants are seriously running out of time to suitably prepare. Leading experts expect HMRC to increase the number of investigations they carry out on recruitment agencies and their compliance. Therefore, you must update your internal processes before the new laws are live or else you are at massive risk of receiving damaging penalties.
Book your free consultation now – before it’s too late
Churchill Knight & Associates Ltd works closely with hundreds of recruitment agencies and provides a leading contractor accountancy, CIS payroll and PAYE umbrella service to their candidates, in full compliance with HMRC.
We understand that there is a lot of important information to take on board regarding the new laws and as a result, our specialists are encouraging you to give us a call and arrange a free consultation either on the phone or in your office.