HMRC is stepping up its efforts to acquire unpaid tax on incentive payments made to recruitment consultants, according to The Freelancer & Contractor Services Association (FCSA).
A number of consultants have already been targeted by HMRC, having received incentive payments from umbrella organisations. However, as no tax was paid as part of these payments, HMRC has decided to act.
Recruitment consultants should be well aware that any money, gift or benefit received should be treated as taxable. Failure to declare correctly may be a breach of the prevention of tax evasion rules, set out in the Criminal Finances Act 2017.
“Those who have been targeted so far are likely to be the tip of the iceberg, which should be a concern for any recruitment agency reading this,” said Julia Kermode, the FCSA’s Chief Executive. “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.”
A timely reminder
Though not affecting contractors directly, the move is sure to displease the recruiters many contractors use.
The news also acts as a timely reminder that HMRC are always keen to acquire what is theirs. We therefore advise all contractors to have a sound understanding of tax system and what should be taxed. Certainly, don't just bury your head in the sand when it comes to your tax affairs. Otherwise, there may be serious trouble ahead!