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UK Criminal Finances Act 2017: is your Recruitment Company prepared?

UK Criminal Finances Act 2017: is your Recruitment Company prepared?


From 30 September 2017, the Criminal Finances Act 2017 will come into force, making all UK partnerships and companies criminally liable if they fail to prevent tax evasion. The new law covers both UK and overseas taxes (if there is a UK element) and ignorance will be no defence. Whether a company is deemed to have no direct involvement or to be blissfully unaware, the prosecution remains the same and could lead to both a conviction and unlimited penalties.


There are many UK recruitment companies that engage the services of overseas contractors who will be impacted by this law. Most of them currently pass the contractors to “Umbrella” companies to manage the financial affairs of these contractors. Previously passing the compliance responsibility down to the service provider was considered enough to satisfy their compliance obligations. However, at the end of September, recruitment agencies will no longer be able to pass the buck for compliance to their payroll partners. This has led me to question how many recruitment companies are aware of the act, let alone have taken appropriate steps to protect their business?


HMRC has issued 48 pages of guidance, which proposes companies undertake risk assessments on any of their systems and processes that could facilitate tax evasion. This tactical approach details how investment in multi-level staff training programmes, together with the implementation of the appropriate steps to minimise risks, can help protect companies against prosecution.


For UK recruiters, the new regulation instructs companies to review the internal structures and policies of the Umbrella companies they engage with. To safeguard themselves, they must seek confirmation and confidence that they are not facilitating tax evasion and have the necessary controls in place that will capture any breaches to these policies.


In preparation for the 30th September, IF Contracting have been working with our clients to provide the necessary assurances around our contractor management structures. Our in-country solutions have been designed to meet the OECD standards on tax treaties and our robust internal policies and controls ensure we can consistently deliver to this level.


Should you wish to know about how the Criminal Finances Act will affect your business or would like to understand how IF Contracting can protect you against it then please call us on: 0203 131 8988


Ray WalkerFounder and
Managing Director