New rules come in to effect on 30th September 2017 that are likely to impact recruitment companies and their relationships with providers. In summary; the new offence aims to hold corporate bodies liable where it can be shown that they have been involved in the facilitation of tax evasion. This will include any employee recommending providers where there is a reasonable expectation that the correct levels of taxes are not being paid.
The onus is on the corporate entity to demonstrate that it has reasonable procedures in place to prevent the offence. This is likely to bring increased pressure on the use of Preferred Supplier Listings with companies that can demonstrate compliance as well as ensuring recruitment consultants operate within the new company guidelines.
Under the new rules a consultant receiving a cash incentive payment for the introduction to a provider is likely to breach the rules in two ways:
Recruiters need to formalise their policies on the provider introductions, preferred supplier listings and commission rebates to stand any chance of mounting a defence.
HMRC enforcement has been active in the sector for months and has considerable intelligence on compliant and non-compliant providers and the companies the non-compliant providers have relationships with. If you are one of these you must change your processes prior to the end of September. All recruiters will need to ensure that all
employees are adhering to your policies as the action of an employee can bring the liability to the corporate entity.