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GLA Victory: Is This a Strong Enough Message to the Industry? Asks Mark Mitchell, CEO, Meridian.

GLA Victory: Is This a Strong Enough Message to the Industry? Asks Mark Mitchell, CEO, Meridian.

In a move that sees the GLA refusing FS Commercial a licence to operate, it would seem that any lingering uncertainty over the legality of pay day by pay day schemes (PDPD) has finally been dispelled.  This is a strong message to the industry that companies operating in breach of dispensations issued to them by HMRC, or in breach of the GLA’s own licencing standard, will be censured. Indeed, as a result of this ruling, the GLA should now start to revoke licences from companies who are unlawfully operating payment or travel and subsistence schemes.

While HMRC should be taking centre stage in stopping companies flouting the rules, the result of this appeal is a worthy victory for the GLA. The GLA has been able to validate HMRC’s position that practices of this nature are unlawful and will not be allowed to operate in industries within the GLA’s remit. This decision may also prove the catalyst for more investigations and licence revocations – perhaps demonstrating that government departments, including HMRC, do have the appetite and resources to tackle this industry issue. But the industry itself has already recognised there is a problem with the number of recruiters, intermediaries and clients being advised into potentially costly and damaging structures. The REC is urging its members to review their business arrangements following this latest ruling. 

The strong HMRC statement in support of the GLA win states: “[The GLA is] sending out a clear message to those who use these [PDPD] schemes, or advocate them, that tax avoidance and breaches of the national minimum wage regulations will not be tolerated”, this should discourage the recruitment industry, intermediaries and end user clients from blindly or knowingly continuing to run the PDPD gauntlet. Ethical recruiters will see this GLA triumph as vindication that this type of scheme is both illegal and immoral, and it will rightly drive business into the compliant and safe hands of companies that do not operate these schemes.

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