Employment Intermediaries - APSCo to present legal argument to treasury
APSCo believes that deeming one person to be liable for tax when they have no connection with the tax liability could breach the Human Rights Act.
Samantha Hurley, head of external affairs and compliance at APSCo, commented, “We are of course in favour of measures to curb tax avoidance and fully support the efforts of HMRC in its endeavours, but what we cannot support is burdening the recruitment sector with a tax liability over which it has no control without giving some form of statutory defence in the event of the unscrupulous behaviour of intermediaries further down the supply chain.”
“We are certainly not arguing for the removal of the legislation altogether – but what we are asking for is a defence for recruitment firms in the event that they have undertaken reasonable due diligence – a defence which already exists in the Agency Workers Regulations.”
“The legislation does include a defence for recruitment firms against the provision of fraudulent documents by other parties in the supply chain, but we believe that this is a red herring as the reality of this situation is that the onus would be on the intermediary to prove not only that fraud had taken place – but also that there was an intent to defraud. Proof of negligence would not be sufficient and intent to defraud is acknowledged to be extremely difficult to prove in court.
“This unquantifiable risk could also give recruitment firms problems in terms of the availability and cost of insurance – and we have already seen examples of associated indemnities – and with their accounts preparation as it is going to be almost impossible for auditors to identify contingent liabilities with such a potentially unlimited exposure.”
We will be writing to The Treasury next week outlining not only the concerns outlined above but also the fact that not providing for a statutory defence poses a major legal risk for the Government itself – a risk which is entirely unnecessary. We will also be inviting other external stakeholders and interested parties to add their names to our letter. As we are not asking for a removal of the legislation itself, we very much hope that the Government will see reason and provide the amendment needed to make the legislation reasonable, proportionate and above all legally robust.”