The Criminal Finance Act – time to review your PSL?

29 September 2017

From the 30th of September 2017, Companies will become criminally liable if they fail to prevent tax evasion by a member of their staff or other ‘associated’ persons who facilitate tax evasion.

The Criminal Finance Act has been implemented to ensure companies look at their supply chain to ensure that it is operating compliantly.   It is now the responsibility of each agency to ensure that all payroll payments made to your contractors are fully compliant with HMRC guidance.

As a result, it’s now an ideal time to review your Preferred Supplier List (PSL).  The best practice solution is to use a list of compliant providers that you know have been fully audited.  You can mitigate this risk by working only with umbrella companies that are FCSA Accredited Members.  Only firms that have successfully passed the independent annual review against the FCSA Code of Compliance are entitled to display the orange FCSA logo.

FCSA Guidance

The FCSA Code is designed to demonstrate to the Government (as well as freelancers, contractors and recruiters looking for a service provider) that a company is financially stable, provides high-quality professional services and operates to the highest standards of transparency and accountability.   To qualify as a member, an applicant must undergo a rigorous review of its business services, operations, policies and processes – established by the FCSA in liaison with HMRC.

In addition to this, SmartWork recommends carrying out a risk assessment of all umbrella providers that you currently work with – via the following steps:

  • Establish if any of your contractors are paid via a loan or offshore scheme (or scheme highlighted by HMRC).
  • Audit a selection of payments from each provider made in the current financial year (6th April 2017). Our suggestion is to request a sample payslip for a specific period with matching RTI, showing gross payment through to NET payment to the individual.
  • Review your policy on referral fees and check to see if your consultants stick to the PSL.
  • Provide training to all of your employees and consultants. If you have an incentive scheme in place, you need to ensure all payments are legitimate and recorded.
  • Review your PSL – Finding out if they are members of the Freelancer & Contractor Services Association (FCSA) is a good place to start.

SmartWork is a full FCSA member, APSCo affiliate & TEAM Service provider and has acted compliantly for over ten years. REC has recommended using FCSA compliant members to minimise their risk, as they are independently assessed by regulated accountants and lawyers.

If your agency would like more information regarding how we can support your workers, please contact our team directly on 0800 434 6446.