Radio 4 report into ‘tax avoidance’ draws response from industry
Following on from revelations which emerged on the BBC Radio 4 Today Programme last week, the recruitment industry has responded to reports of tax avoidance by one company. “I am very concerned to hear about such poor practice taking place, and I would like to emphasise that FCSA does not condone these tax avoidance schemes, nor does it represent any firm operating such,” said FCSA’s CEO Julia Kermode. The report exposed a scheme by which recruitment agencies were claiming Employment Allowance multiple times, each time reducing their National Insurance bill by £2,000.
“The government’s Employment Allowance Scheme was clearly developed with the intention of supporting small businesses and recognising their important contribution to the economy, and not to facilitate profiteering by unscrupulous providers,” said Kermode. “We support the media bringing this to our attention so that we can unite in opposing the scheme, and take steps towards eradicating such practices.
“I would like to use this opportunity to redress the balance as the vast majority of employment service provider firms do not operate in this way, and should not be tarnished with the same brush,” she added. “We do not tolerate tax avoidance, and FCSA will continue in it’s mission to raise standards throughout the contractor management sector, ensuring that bad practices are stamped out.”
Matthew Brown, managing director of specialist service provider, giant group, also commented on the story, saying: “Companies and practices that utilise schemes to avoid paying tax and National Insurance contributions bring the entire industry into disrepute. We’re naturally concerned that these allegations tarnish all companies with the same brush, when the majority – including giant group – are operating in a completely compliant way. We welcome HMRC’s intentions to ‘pursue users and promoters of the scheme’ and to ensure that only organisations that are complying with regulations are allowed to operate in the sector.”
Brown suggests that further incidents could be prevented from happening by simplifying tax legislation. There are currently over 1,100 tax relief schemes and removing many of these would prevent firms from being able to operate above the law. “Thankfully, the Office of Tax Simplification has such a remit and a number of initiatives that aim to simplify this area come into force in April 2016,” notes Brown. “We’d encourage companies to engage with accredited members of trade associations, such as the FCSA, which ensure their members are reviewed against a publicaly available code that ensures standards are being adhered to. We hope all bad practice is stamped out quickly as incidents like this can really damage the reputation of the temporary recruitment service provider industry.”
