Recruiters liable for tax-cheat employees under new Bill

Recruiters have been warned to ensure they have reasonable tax avoidance prevention procedures in place or risk falling foul of new criminal finance rules.

Agency bosses could be hit with unlimited fines or even face criminal conviction if they fail to comply with the Criminal Finance Bill, which received Royal Assent a month ago.

Drawing attention to the new rules, specialist contractor management firm 6CATS International said today that the Bill means agencies are now liable for the actions of all of their employees, meaning that if an employee facilitates tax evasion in any way then the employer could receive an unlimited fine and a criminal conviction.

The firm added this not only applies to consultants, but also all employees remunerated through an organisation’s payroll, including contractors working on short-term assignments.

But employment lawyer Christopher Tutton told Recruiter that it’s important to note that there is a defence for recruiters who can prove they have taken ‘reasonable prevention procedures’ outlined in the rules published by government.

“In practice, it will work in a similar way to the anti-bribery legislation in the UK,” Tutton said. “For example, recruiters that conduct risk assessments on the nature and extent of its exposure to risks and put in place procedures to prevent the facilitation of tax avoidance should be able to rely on the defence.”

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