If you’re the director of a recruitment agency, having in place a PSL (preferred supplier list) of umbrella companies and contractor accountants brings many benefits.
Assuming it is properly enforced and embedded across the business, a PSL will give you control over the providers to which your recruitment consultants are referring contractors.
This control enables you to ensure that your contract candidates are put in touch only with compliant, professional and ethical providers that offer a high-quality service.
Having carried out due diligence and selected a handful of suppliers that fit the bill, you’ll know that your agency is partnering with the very best that the contractor services sector has to offer.
This gives peace of mind. It also makes commercial sense.
Now there is another reason to implement a PSL.
‘Failure to prevent the facilitation of tax evasion’
Since 30th September a business is criminally liable if it fails to prevent those who act for it, or on its behalf, from facilitating tax evasion.
A business that is found guilty could face:
- a criminal prosecution;
- an unlimited financial penalty;
- a public record of conviction; and / or
- restrictions on its ability to trade in regulated industries.
The new corporate offence, part of the Criminal Finances Act, means it is incumbent upon agency directors to know their supply chain.
Examples of offences
An example of an offence would be where an umbrella company or accountancy firm pays unauthorised referral fees to a recruitment consultant without tax being paid or operated.
Another example is a scenario whereby an end client engages workers via an intermediary that makes payments to workers via offshore, illegitimate or dubious structures that HMRC then challenges.
In both cases, the recruitment agency could find itself in hot water.
How a PSL helps
It’s worth noting that a business will have a defence if it can prove that it had reasonable prevention procedures in place to prevent the facilitation of tax evasion.
There’s no guarantee that a properly enforced PSL in itself would be a sufficient defence, but common sense dictates that it would certainly help a company’s case.
Plus there’s the fact that, by having in place a PSL made up of compliant, ethical providers, the agency would reduce the risk of its staff members and suppliers facilitating tax evasion in the first place.
FCSA members and your PSL
Fully accredited Freelancer & Contractor Services Association (FCSA) members such as ADVANCE undergo rigorous compliance reviews every year.
The reviews are carried out by external auditors from a Big Four accountancy firm, with the provider’s policies and processes being reviewed to ensure compliance with the strict FCSA code of conduct.
That’s why full FCSA membership is considered the gold standard when it comes to professional and ethical standards in our sector.
Find out more
Get in touch below for more information on the Criminal Finances Act, implementing a PSL or the benefits of working with ADVANCE.