The Criminal Finances Act 2017 came into effect on 30th September 2017. The legislation was introduced by HMRC to stop facilitators of tax evasion by making it easier to target and prosecute companies and individuals found to be doing so.
The legislation states that an offence is committed where a corporate entity or partnership fails to prevent an associated person from criminally facilitating the evasion of tax, whether the tax evaded is owed in the UK or a foreign country with a connection to the UK.
Even if only one consultant is making dodgy referrals the whole company will be found guilty of non-compliance. Therefore, recruitment agencies must have procedures in place to ensure all staff members adhere to the law and are aware of the consequences of non-compliance.
If any consultants are accepting referrals from compliant umbrella companies, they must also declare these on a Personal Tax Return as the tax may not have been paid on the referrals.