Analysis of data from 6CATS International shows that staffing agencies will have additional risk with the introduction of the Criminal Finance Bill, which was given Royal Assent on 28th April.
Effect on staffing agencies
The bill will hold staffing agencies responsible if their employees try to evade taxes. The bill covers all employees, including contractors, consultants and other employees who are on the payroll of the recruitment agency. This is something that IT contractors should take note of even if they are working on short-term projects.
The new bill will hold staffing agencies liable, and they could face unlimited fines and also a criminal conviction.
6CATS International CEO Michelle Reilly stated that the bill has been introduced to prevent tax evasion, which is a major problem at the moment. Also, with the severity of the punishments increasing, it will have a major impact on many staffing firms.
Reilly pointed out that even a false expenses claim or a contractor not paying tax could land recruitment agencies in trouble.
It is important to note that the bill is not restricted just to contractors and consultants working in the UK but also covers those assigned to projects overseas, allowing the authorities to initiate proceedings against the recruitment agencies in the UK.
Global leader in compliance
While staffing agencies will have more laws and regulations to contend with, Reilly believes that the bill will go a long way to making Britain a world leader in compliance. It will set an example for other nations to follow, considering that businesses today are globalised.
SIA Director of Legal and Regulatory Research Fiona Coombe stated that staffing agencies will need to be more aware of different tax schemes and implement the right procedures for their staff and contractors so that they are not held liable for tax evasion perpetrated knowingly or unknowingly by their staff, contractors and sub-contractors.