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Agency News

Following the Chancellor’s Autumn Budget Statement delivered on Wednesday 3rd December, umbrella companies are to be subject to renewed scrutiny as George Osborne attempts to maximise the nation’s tax revenue. In particular, those companies operating a Pay day by Pay day model or breaching National Minimum Wage regulations are to be actively targeted in the forthcoming financial year.

In his own words, the Chancellor commented:
"We are consulting on other [tax avoidance] measures including the use of so-called ‘umbrella companies' to deprive people of basic employment rights like the minimum wage and to avoid tax."

He also went on to say:
"As part of its reform of the rules for employee benefits and expenses in response to recommendations by the Office of Tax Simplification, the government will stop tax relief from being claimed on reimbursed business expenses when they are paid in conjunction with a salary sacrifice scheme.

The Chancellor's statement makes it crystal clear for the temporary recruitment sector that any attempt to minimise tax revenues by agencies and their intermediaries will be vehemently pursued by HM Revenue & Customs and breaches will be heavily punished.

This announcement is of no surprise to RACS Group who has championed all aspects of compliance for the past eight years. Indeed, we have noted increased vigilance by HM Revenue & Customs in recent months in the form of letters sent directly to contractors which request specific information regarding their employment status and gross income plus their agencies and intermediaries.

It is fair to say that these letters are the most detailed ever seen by RACS Group and they clearly herald a new approach by HM Revenue & Customs. Distributed by the Counter-Avoidance Team, the letters are accompanied by a Compliance Checklist leaflet which highlights the extent of the scrutiny the recipients are placed under and an overview of the process itself.

To download a list of the information and documents on the Compliance Checklist, please click here:

Terry Hillier, Managing Director of RACS Group commented:
"We have been aware that our industry has been highlighted as an area of tax avoidance for some time and welcome the Chancellor's comments in the Autumn Budget Statement.

"Compliant umbrella companies such as RACS Group have had their reputations tarnished for far too long by unscrupulous competitors who continue to confuse contractors and abuse the spirit of existing legislation.

"We encourage all recruitment agencies to conduct the most thorough audit of all their intermediary providers now as these tax avoidance measures are already happening; the implications for Directors following any breaches of compliance are damaging in the extreme both in terms of fines, commercial reputation and potential imprisonment."

For more information and to arrange an immediate compliance review, please contact Adam Jordan now on 0845 604 0571 or via adam.jordan@racsgroup.com.

 

 

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Copyright RACS Group 2017 - Recruitment and Contractor Services Limited

Registered in England & Wales – Company No. 6073586 – VAT No. 891 863 869
Registered Office – RACS Group House – Three Horseshoes Walk – Warminster - Wiltshire – BA12 9BT

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Copyright RACS Group 2016 - Recruitment and Contractor Services Limited

Registered in England & Wales – Company No. 6073586 – VAT No. 891 863 869
Registered Office – RACS Group House – Three Horseshoes Walk – Warminster - Wiltshire – BA12 9BT

Terms & Conditions - Privacy Policy - Sitemap
RACS Marketing