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Criminal Finances Act: What recruiters need to know

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The Criminal Finances Act comes into effect on 30th September 2017, and it’s a piece of legislation that should be on the radar of all UK recruitment agencies.

So what does the forthcoming introduction of the Criminal Finances Act mean in practical terms? What should recruitment agencies be doing to prepare?

Here we provide an overview of the legislation along with some recommendations for agencies.

An introduction to the Criminal Finances Act

The most relevant section of the legislation as far as recruitment agencies are concerned is part 3, entitled ‘Corporate offences of failure to prevent facilitation of tax evasion.’

In a nutshell, from 30th September businesses will be made vicariously liable for the criminal acts of their employees and other ‘associated’ persons who facilitate tax evasion whilst performing services for them.

This liability applies even if the senior management of the business had no involvement in, or awareness of, what was going on. The legislation states that:

A relevant body is guilty of an offence if a person commits a UK tax evasion facilitation offence when acting in the capacity of a person associated with (it).

A business will have a defence if it can prove either that:

  • it had reasonable prevention procedures in place to prevent the facilitation of tax evasion, or;
  • it was not reasonable in the circumstances to expect procedures to be in place.

Worryingly, as a recently as May a survey by Pinsent Masons found that 76% of senior executives were unaware of the new offences. The law firm issued the following warning at the time:

Businesses which … engage casual or itinerant labour and contractors are at high risk of falling foul of the new legislation.

Recommendations for recruitment agency directors

Fortunately, recruiters still have time to act in order to ensure readiness for the new legislation. Here are our top five recommendations:

  • Read the legislation in full – take the time to get to grips with the legislation itself, as opposed to the guidance or any commentary you may have come across.
  • Engage in staff training – make sure all recruitment consultants and other staff members are aware of the new offences and the seriousness of a breach.
  • Conduct a process audit – analyse your internal processes in order to identify any areas of potential risk / exposure and take appropriate action.
  • Review your supply chain – ensure that all of your preferred umbrella company / contractor accountancy providers can demonstrate that they adhere to the highest ethical and professional standards. Compliance with the Freelancer & Contractor Services Association (FCSA) code of conduct is a good measure.
  • Seek professional advice – if you have any concerns, it is advisable to gain the benefit of independent advice from qualified, external experts.

The ADVANCE view

Shaun Critchley, managing director at ADVANCE and a qualified solicitor who specialises in recruitment, tax and employment law, said:

This is a significant piece of legislation and a welcome step in the ongoing fight to raise standards in the recruitment and contractor services sector. I would recommend that all agency directors carry out a thorough review of their supply chain and factor this new measure in when making Preferred Supplier List (PSL) decisions. As the only provider with FCSA accreditation for umbrella, limited and self-employment solutions, ADVANCE‘s compliance credentials are second to none and we look forward to answering any questions our agency partners may have.”

Criminal Finances Act: Find out more

If you are a senior executive at a UK recruitment agency and would like to find out more about the Criminal Finances Act, please fill in the below form.

We will then contact you with a view to arranging an informal, free, no-obligation consultation with Shaun.



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