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HMRC is pursuing unpaid tax on incentive payments

FCSA has heard that HMRC are pursuing unpaid tax on incentive payments – recruitment agencies please beware!

Last week some recruitment consultants started receiving bills from HMRC for unpaid tax on incentive payments.  It seems that the consultants received payment from one or more umbrellas and no tax was paid on this income, hence the bill from HMRC.  If your staff accept monies, vouchers or any other benefits in kind from an umbrella or accountancy provider it should be treated as taxable income.  A failure to declare this may breach the prevention of tax evasion set out in the Criminal Finances Act 2017, even if you do not know it has taken place.

Commenting on the story, Julia Kermode, FCSA’s Chief Executive said “Those who have been targeted so far are likely to be just the tip of the iceberg, which should be a concern for any recruitment agencies reading this.  In order to protect supply chain partners from an unexpected tax bill, we require FCSA Accredited Members to ensure that appropriate tax is paid on any incentives paid to recruitment businesses or their staff.  This is yet another reason why an increasing number of agencies require FCSA accreditation for their PSLs.”

Businesses can mitigate their risk by having a preferred supplier list made up of trusted partners, such as fully compliant and transparent FCSA Accredited Members, and having robust policies and procedures in place that are communicated to all staff regularly.

You can find out more about the impact of the Criminal Finances Act via our factsheet, click here to download >