Compliance – Does it pay recruiters to adopt it?

Compliance – Does it pay recruiters to adopt it?

With recession and austerity measures in full effect, media coverage of tax avoidance schemes and tax compliance is commonplace with the emphasis on the moral obligation placed on individuals and firms to pay a ‘fair share’ back into Parliament coffers. The Government is now arguably under greater pressure now than it has ever been to raise revenues wherever possible.

The recruitment sector is no stranger to the issue of effective compliance for contractors, and the failure to provide adequate tax solutions is an unfortunately regular occurrence across many different recruitment sectors.
Many recruitment agencies themselves are not staffed with tax specialists, and the solutions proposed to their contractors are often commercially pressurised to favour financial incentives. This is done over understanding the longer-term implications that poor compliance can pose.

Indeed, the consequences can be dramatic. The 2007 Managed Service Company legislation (MSC) means that unpaid tax liabilities held by contractors can be transferred to associated parties, amongst them recruitment agencies. Vast HRMC claims on these liabilities can have disastrous financial results for any agency caught up in poor compliance.

So to whom can recruitment agencies turn for guidance? HR Aspects Magazine spoke with a company that specialises in offering advice on payroll and tax issues.

Their Director commented: “Clearly the emphasis on effective tax compliance is at the forefront of business concerns across many sectors. We believe our service to recruitment agencies can ease the burden on both the agency and contractor sides.”

He continued: “As a firm of accountants, and a fully HRMC compliant company, we house expert advice and experience under one roof. Working across several unaudited providers isn’t efficient and can be risky.

By working with specialist organisations, agencies can be assured of a compliant service which offers tax and legal advice. This, in turn, can help relieve the stress and time it takes to manages contractor’s payroll compliance issues.