Whether you are an agency or an end-hirer, there is no doubt that today, supply chain compliance is a topic that you must take seriously. Legislation introduced over the past five years has established significant financial penalties for those that fail to comply, impacting the current and future valuation of your business.
The legislative provisions include;
- The Criminal Finances Act 2017 (CFA 2017): Agencies and end-clients are at risk of criminal prosecution and unlimited fines if they fail to prevent the facilitation of the UK or foreign tax evasion in their supply chain. This is a strict liability offense, and the only defense is to demonstrate you put appropriate policies, risk assessment, and processes in place to mitigate the risks.
- Promoters of Tax Avoidance Schemes (POTAS): With a widening of the definition of ‘promoter’ for the purposes of POTAS, the legislation now applies to everyone in a ‘promotion structure’. Importantly, this includes where an agency that has previously been involved in the promotion structure is acquired as the penalties can transfer to the acquiring company.
In an industry where 100% of Payroll Companies, say they are 100% compliant, 100% of the time, it is essential for Agencies and End-hirers to implement their own checks and balances that can determine which company is genuinely compliant alongside those that could be putting their business at risk.
SafeRec and WTT have launched a comprehensive service that combines technology and expert legal advice from a regulated law firm, to not only protect your business but also your entire supply chain, in real-time.
From Risk Assessment, Policy drafting, Due Diligence and real-time payroll auditing, you will have access to a full suite of services that will help you automate compliance, without stretching your existing resources.
Why is a new Offering necessary?
Umbrella companies have existed for 25 years and following Off-Payroll reforms are used more widely than ever. Despite this, even now, the only preventative measure you can take as an agency or end hirer to protect your supply chain from risk arising from Tax leakage is to prove you have assessed your umbrella company’s compliance. Commonly this is an infrequent assessment that relies upon trust that what the umbrella says on day one is concurrent with what actually happens on day two and into the future.
This is what the service seeks to overcome.
What document does my business have on file?
If you want to understand whether your business is potentially at risk of any unpaid tax, you simply need to ask yourself a simple question: “What internal documents do we have on file to prove to HMRC that we have the correct processes in place to prevent the facilitation of tax evasion?”
Inevitably the vast majority of businesses have no fixed policy in place and where they do, it is not policed, updated or enforced. Instead, understandably, reliance is placed upon trade accreditations to audit these supply chains in absence of internal checks and balances. These accreditations do however make it clear that this is not their responsibility.
It is therefore essential that agencies and end clients understand that accredited bodies are not claiming to remove the business’ own risk. They tell you this themselves in their literature.
It remains incumbent upon you to ensure this for yourself. Accreditations can help, but ongoing, real-time consistent internal validation is essential and the only way to remove risk from your supply chain comprehensively.
How will SafeRec & WTT protect your business & Supply Chain?
For an introduction to SafeRec and WTT, you can read the interview of Rhys Thomas (Managing Director, WTT) and Sebastien Sauca (CEO, SafeRec) about “How Payroll/Umbrella Non-Compliance will impact your company’s valuation?”
After 10 months of research and development, meeting with different stakeholders, workers and government organisations, SafeRec and WTT came up with an advisory process that allows any business (Agency, MSP, End clients) to audit their supply chain in real-time whilst receiving the constant support of a regulated law firm.
The offering is broken down into 5 services:
- Service #1 – Risk Assessment: Conducting a Risk Assessment on your supply chain is one of the 6 guiding principles recommended by HMRC. Using this process, a regulated Law Firm, WTT Legal will meet with your agency and assess your supply chain risk through a series of stakeholder meetings, summarising your areas of weakness and potential exposure.
- Service #2 – Tailored Criminal Finances Act Policy: Too few organisations know it but a Criminal Finances Act policy is a must-have. Following the risk assessment, the findings will be used by WTT will create a tailored Criminal Finances Act Policy for your business. This will involve ongoing stakeholder training and testing for key individuals in your organisation, to ensure permanent compliance with the policy.
- Service #3 – Umbrella Due Diligence: SafeRec will undertake Umbrella Due Diligence on the Umbrella’s operating in the supply chain PSL and those who wish to join. This process includes reviewing the contract of employment, how the umbrella company complies with laws and regulations, which payroll software they use, etc and is formulated using guidelines established by its partners, APSCo and REC.
- Service #4 – Real Time Payslip Audits: SafeRec’s proprietary technology will then audit the payslip of all your workers, each week, and provide you with a payslip audit report for each of them. It proves that all deductions on a payslip have been calculated accurately and are available for inspection by you and the supply chain, at any time on your SafeRec Dashboard.
- Service #5 – Remediation and Support: WTT’s Tax team will remediate any failed payslip audit ensuring either ongoing compliance or removal from the PSL and are on hand at all times with the legal helpline that is built into the pricing.
All services are optional and included in the standard pricing model. So, if there is a service you do not need it is entirely up to you.
What will change for your business?
Protect your Business: Prevent Unexpected Tax Risk
For the question posed earlier in this article- “What internal documents do you have on file to prove to HMRC we have processes to prevent the facilitation of tax evasion”?
With SafeRec and WTT here is your answer:
“We commissioned WTT, a regulated law firm, to undertake a risk assessment on our supply chain. Then, they worked with our board to establish a Criminal Finances Act Policy based on their findings. They then implemented an ongoing testing system to ensure compliance throughout our organisation. Once we were aware of the risk, we use SafeRec to undertake Umbrella Due Diligence on our providers. Additionally, the payslip of every single one of our workers is audited every week and we receive a copy of each payslip audit report. We have a copy of all these documents on file if needed”
Protect your Clients: Commercial Advantage
Don’t forget that your end clients have exactly the same level of liability that you do under the Criminal Finances Act 2017. Therefore, proving compliance means that you can anticipate your client’s requirement for this, creating a competitive advantage and permanence to your client relationships. Your supply chain will be able to access the payroll reports at all times, via the SafeRec portal.
SafeRec and WTT’s top 3 core beliefs define the entire strategy:
- Any party in the supply chain (From Workers to End Clients) should be able, at any time, to get proof that their supply chain/payroll provider/Umbrella Company is Compliant and Ethical.
- Organisations must have access to automated solutions to be able to defend their business against laws and regulations that put their future at risk
- Payroll compliance should be something that agencies and vendors can demonstrate to their clients further strengthening existing engagements and creating market advantage over competition.
SafeRec & WTT’s new offering will solve your compliance problem. The offering can work alongside existing processes, advisers and accredited bodies to extend your compliance framework into something that protects you and your supply chain from risk.