REC welcomes HMRC crackdown on tax evasion and bad practice

Filed under News update

Tuesday, 19 April 2011

Released on 19 April 2011

HM Revenue and Customs (HMRC) has today announced plans to double its quota of specialist officers cracking down on labour providers who fail to pay tax and evade current regulations. This is a positive development and follows REC calls for both HMRC and the Department for Business (BIS) to increase enforcement activities and ensure a level playing field for compliant agencies.

Specific priorities that the REC has flagged up to HMRC and BIS officials include the need to enforce the travel dispensation changes that were introduced in January and to address ‘phoenixing’ within the sector. This last issue was raised directly with Employment Relations Minister Ed Davey at a meeting at the REC offices last December.

Today’s announcement confirms that the enlarged enforcement team will focus on specific areas such as bogus supply chains, repeated liquidations to avoid paying debts (ie ‘phoenixing’), failure to keep business records and failure to pay the National Minimum Wage.

Commenting on the announcement and what it means for recruiters, Tom Hadley, the REC’s Director of Policy and Professional Services, said:

“This is a big step forward, there is nothing more frustrating than to be placed at a commercial disadvantage by doing the right thing. Unfair practices create market distortions and have a huge impact on legitimate businesses as well as on workers. We need clarity and consistency in the way that regulations are applied, we also need real clout in terms of Government enforcement.

“As well as monitoring how today’s announcement works on the ground, we will continue to play our part by flagging regulatory changes and working with recruiters to ensure they are compliant.  HMRC has said today it will work in collaboration with labour users and businesses to help them use legal providers and the REC will do all it can to further this aim.”

The plans announced today will take the number of specialist officers to more than 200. HMRC anticipates this will bring in another half a billion pounds in tax in the next four years.

In announcing the new enforcement drive, Mike Eland, HMRC Director General of Enforcement and Compliance, said:

"Building on HMRC's successful approach to tackling fraud in the labour provider industry, these teams will make it even harder for fraudsters. We will tackle employers who don't play by the rules and the organised crime gangs who exploit their workers. We will also work collaboratively with labour users and businesses in these sectors to help them use legitimate providers. This will help to create a level playing field for compliant businesses to compete in the market place."


Contact: Ed Sexton

Phone: 020 7009 2192

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