CFA One Year On: HMRC to Crack Down on Tax Evasion

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As a recruiter, compliance should be at the forefront of every decision you make.

Last year, the ‘CFA (Criminal Finances Act) risk’ came into full force after a report was published. The Criminal Finances Act 2017 ruled that companies would be held accountable for facilitating tax evasion by their staff and partners, even if they were unaware. In a recent report by Tax Journal, it appears that HMRC is planning to investigate sectors, and their approach is set to be aggressive.

At Parasol, we understand that keeping up with legislation isn’t always easy. That’s why we’ve outlined the key takeaways which you may need to be aware of if you work with umbrella companies, along with how this could impact your working practices.

What are the key takeaways from the report?

The extensive report outlined the following changes which could affect the practices of your business:

  • The use of complex tax structures, tax advisors, supply chains internal cultures which encourage excessive risk-taking will be regarded as higher CFA-risk practices.
  • Staffing companies should carry out proper risk assessment and due diligence on risk areas. Companies should also prove that they have created a ‘reasonable procedures’ defence.
  • Companies will need to carry out risk assessments with their umbrella companies.
  • Arrangements with umbrella companies should make it clear that the company does not perform services for and on behalf of the staffing company.
  • Arrangements involving third-party payments of lower paid workers should be deemed as posing a high CFA risk. Staffing companies will need to illustrate they understand how the schemes work and that the schemes do not involve fraud.
  • Staffing companies should review any steps they have already taken in relation to identifying and assessing CFA risk to ensure that they have done enough to provide them with a defence.

How can you stay protected?

More than ever, compliance should be your top priority. Working with compliant umbrella companies like Parasol means you will be protected by stringent regulations and specialist teams of legal and compliance experts. At Parasol, we’re accredited with industry bodies such as APSCo and we’re an associate member of the FCSA. This means that compliance is always our number one consideration.

Stay up to date

We understand that things change quickly when it comes to legislation, but we’re here to help. To keep you up to date with all of the latest news and developments, visit our news centre.

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