The Criminal Finances Act 2017

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You can't afford to be non-compliant with the Criminal Finances Act

Are you complying with the Criminal Finances Act?

The Criminal Finances Act 2017 came into effect on the 30th September 2017. The legislation was introduced by HMRC to make it easier for them to target and prosecute companies (especially recruitment agencies) who are facilitating tax avoidance and tax evasion.

A Summary of the Criminal Finances Act

Here are some facts about the Criminal Finances Act 2017:

  • The Act was fast-tracked through parliament.
  • Organisations will be guilty of non-compliance if they are found to be promoting tax avoidance and tax evasion schemes. This includes referring their candidates to non-compliant and unethical accountancy and payroll providers.
  • Even if just one recruitment consultant makes a dodgy referral, the whole recruitment agency is accountable for his/her actions. The punishment could be an unlimited fine.
  • It is vital that recruitment agencies understand the new legislation and have procedures in place to ensure every member of staff remains compliant and is aware of the consequences.
  • If recruitment consultants accept referral incentives (from compliant providers), they must declare these on their personal tax return - if the tax has not been paid on the items they have received. The idea of this is to stop unofficial and backhanded incentives being passed out in the industry because the fines that could be distributed by HMRC are severe.
  • Recruitment agencies must understand that their candidates should all be receiving a similar take home pay and that the amount of tax and National Insurance Contributions (NIC) made by each candidate is what HMRC expect.

You Should Already be Prepared

Your recruitment agency should already be fully prepared to operate compliantly with the Criminal Finances Act 2017.

If your agency is faced with an investigation from HMRC, you must be able to provide thorough evidence that you have carried out the following:

  • A compressive assessment has been carried out of all internal processes to ensure there is no risk of non-compliance.
  • Every new process that has been introduced to maintain compliance has successfully been implemented by staff.
  • Your agency is committed to compliance and will always continue to be.
  • Suitably completed a thorough due-diligence check to ensure internal operations are up-to-date and compliant.
  • All your employees have received comprehensive training and understand the risks associated with non-compliance.
  • Your staff are monitored to ensure they are operating compliantly and in line with the new procedures your agency has put in place to be compliant with the Criminal Finances Act.

When is the Criminal Finance Act breached?

Your recruitment agency may be found guilty of facilitating tax avoidance and tax evasion if the three pointers below are satisfied.

1. Your candidates are not paying the correct amount of tax and NICs, in the views of HMRC.

2. The tax avoidance/evasion was carried out because of the recommendation of a “facilitator”.

3. Someone at your recruitment agency has pointed the candidate in the direction of a non-compliant accountancy or payroll provider and has satisfied the role of the facilitator (thus working for your company lands your company in trouble).

How are recruitment agencies being impacted?

The new rules are already having a heavy impact on the recruitment industry.

  • Non-compliance could result in unlimited fines for your recruitment agency and custodial sentences for those responsible for the breaches in compliance.
  • Agencies must have internal procedures in place to actively ensure compliance is always maintained.
  • The primary types of tax avoidance and tax evasion schemes being targeted are offshore intermediaries (the types of companies offering your candidates up to 90 percent take home pay) and aggressive onshore schemes.
  • If your agency is ever investigated by HMRC, you must be able to provide suitable and thorough proof that your business has done everything in its power to remain compliant and to train staff on the Criminal Finances Act and how to operate ethically moving forward.
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Do you have any questions?

If you have any questions about the Criminal Finances Act 2017 and the risks of non-compliance, please give our Agency Sales Team a call on 01707 671645, or email us at

More information on the Criminal Finances Act 2017 can be found in our thorough Blog article - Be aware - failure to act on tax evasion could land your recruitment agency with an unlimited fine.

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