Recruiters - how compliant are your suppliers?

The recruitment press has been dominated with the story surrounding the jailing of the directors of an umbrella company found guilty of payroll fraud. The case has signalled a red flag for all recruitment agencies prompting the need to ensure that all their suppliers are fully compliant.

The case involving Quality Premier Services saw the company’s directors sentenced to a total of 27-and-a-half years in prison for illegally pocketing VAT payments made by the recruitment agencies they were supplying. Rather than passing on the VAT to HMRC, they used the money to fund their own lavish lifestyles.

According to reports, the three directors paid just under £4 million to HMRC and kept more than ten-times that amount (£45 million) for themselves. The money was spent on luxury cars and a property portfolio that included several mortgage-free properties in the UK and Spain. This was all in the space of just three years, from 2012 to 2015.So what lessons can recruitment business leaders learn from this?

While this is certainly an extreme case it nonetheless serves as a reminder of the need for recruitment businesses to ensure that they know whom they are dealing with.

HMRC is making strides in clamping down on the practices employed by those firms operating outside of the law, but there is only so much they can do and the timeframe within which they can do it.

Therefore, it is important that recruitment business owners take the initiative and check that their supplier of choice is fully compliant and operating in a legal and transparent way. The consequences of not doing so can be severe.

Indeed, if you are a recruiter referring your workers to an Umbrella provider that is operating outside of the rules, the risks to you as an agency could be substantial.

For instance, if the right amount of tax is not paid then HMRC can pursue and hold third parties (i.e. the recruitment agency) liable for the unpaid debt whether intentional on your part or not. This could  result in an unlimited fine or even a jail sentence – the consequences of which are obvious.

This is a time for greater due diligence when it comes to selecting the finance provider that you partner with. 

If you need advice or guidance on any aspect of what has been discussed above, speak to us today. Simplicity is one of the UK’s leading specialists recruitment finance providers in the UK for a very good reason – we protect your business and enable it to grow faster and smarter.