Damian Broughton, managing director of Danbro Accounting for Life, has urged professional recruiters to play it safer – and blow the whistle on providers who are not playing it strictly by the book.
“Providers must honour not just the letter of the law but the spirit of the law,” adds Mr Broughton who leads the Lancashire-based company which has 600 partner recruiter agencies and 8000 clients nationally.
The industry is becoming littered with high profile casualties of their own arrogance and HMRC’s crackdown on tax avoidance and evasion.
Mr Broughton adds: “Agencies should not just take their word for it – that they are compliant – but check it out for themselves. The same advice goes to all clients of all kinds.”
Golden rules include look at accreditations, inspections, the systems, processes, procedures in place. Check out reviews, case studies. Look at awards or industry plaudits – and those all important affiliations with respected trade associations.
Read between the lines as well as on them – because it’s not just your money on the line if it all goes wrong but your reputation and credibility too.
Mr Broughton says a reputation for integrity is hard won and easily lost. “Recruiters have to play their part – in fact all clients, big and small.”
He warns some so-called loopholes have the capacity to turn into sink holes for those trying to cut corners. “It’s false economy. It’s also wrong. Just because you can do something does not make it the right thing to do.”
Mr Broughton’s comments come after yet another high profile casualty of HMRC’s crackdown on alleged tax evasion. Revelations of abuses of the Government’s Employment Allowance – which was introduced to encourage small businesses to take on more workers – have hit the headlines and TV screens in recent days.
One scheme is said to have aggressively exploited the well meaning scheme as tax avoidance which could deprive the Treasury of tens of millions of pounds of National Insurance payments.
HMRC has issued Spotlight Guidance warning of fines of up to £1m if users and promoters (such as agencies) flout the DOTAS (Disclosure of Tax Avoidance) rules.
The Employment Allowance legislation already makes it clear that artificially created companies cannot claim the allowance. Yet the BBC claims to have found more than 2000 limited ‘pop up’ companies created by those alleged to be behind one high profile tax avoidance scheme to trouser cash which would have otherwise gone to the Treasury.
Mr Broughton welcomes HMRC’s hard line stance and reiteration of the rules. “HMRC has rules to which we should all be adhering. The obligation is on professionals to tell HMRC, share their concerns if in any doubt at all that a solution being offered to them could be viewed as tax avoidance.
“If there’s a possibility someone may not be operating in the correct manner – within the company or beyond the company – blow the whistle.
“You could be held culpable otherwise and liable to fines. Your reputation and credibility would be on the line. Agencies need to be aware of that. Don’t get dragged down by dodgy practices.”
Mr Broughton has also offered guidance on how to double check your accountant is 100 per cent accountable and compliant.
“We have recruitment agencies who come in and audit our processes. Others send us compliance questionnaires for us to complete and confirm the processes and checks we have in place.
“Look for third party external audits of processes and operations. We have passed the audit process put in place by Professional Passport, a third party which comes in to check process and procedures. Or accreditation with a third party such as the FCSA.
“Look for accreditation with internationally recognised service quality standards. We have ISO 9001 and IIP (Investors in People) Gold and Champion status.
“It’s all about our corporate values and commitment to best practice, honesty, integrity and great customer service.”
Danbro is also one of the few umbrella companies to be Customer First-accredited.
“These are all external people coming in to look at our processes for those relevant areas – and they are not easy to please,” adds Mr Broughton.
“You’ve also got to make sure the company you may be dealing with is governed by an institute of accountants, be it the Institute of Chartered Accountants in England & Wales, the Institute of Chartered Management Accountants or the Association of Certified Accountants.
“Again it shows they are part of a professional body and adhering to codes of conduct. It’s about doing some homework before you trust others with your business and your reputation – and providing peace of mind.
“HMRC should spend more money on employing people to counter tax avoidance. Every £1 spent on employing somebody to counter tax avoidance brings in £9 into the treasury.
“We need to take a moral judgement on what is right and wrong and we need to work within the spirit of the law.”
Jacqui Morley PRCA
*Breaking news: it has just been confirmed (source: Accountancy Age) that HMRC, even hamstrung by resource cuts, has paid out the highest ever amount to tax ‘whistleblowers’- £605k (50 per cent up on the previous tax year).