Diligent agencies need not fret over Criminal Finances Act

Are you worried about the implications of the new Criminal Finances Act that comes into force at the end of this month? While the legislation applies to all businesses, not just the recruitment industry, many agencies are concerned about what the new rules set out in Part 3 of the Act – ‘Corporate Offences of Failure to Prevent Facilitation of Tax Evasion’ – mean for them.

Some agencies seem to believe that these new tax evasion rules directly affect their relationship with payroll providers, specifically when it comes to third party debt transfer. They fear that if the provider was found to be underpaying tax, the agency would be liable for the transfer of debt.

This is not the case. The payroll provider carries the risk, not the agency.

This is not to say you shouldn’t be diligent about who you work with. Clearly you need to scrutinise your providers carefully and regularly to ensure they’re compliant with all applicable legislation and not engaged in aggressive tax avoidance schemes. But if you’re already rigorous about ensuring your supply chain conforms to last year’s travel and subsistence regulations and this year’s new IR35 rules for contractors working in the public sector, then there’s no need to revisit those arrangements.

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