On April 27th, the Criminal Finances Bill received Royal Assent becoming the Criminal Finances Act 2017 and represents a significant development in the UK’s anti-money laundering regime in over a decade as well as the largest expansion of corporate criminal liability since the Bribery Act 2010. From 30th September 2017, companies will be criminally liable if they fail to prevent tax evasion by a staff member or external agency, even if the business was not wholly involved.


Criminal Finances Act 2017

Although tax evasion is already an offence, it has not been possible to attribute criminal liability. However, beginning in Autumn, these new rules from the Criminal Finances Act 2017 will target deliberate and dishonest behaviour. The focus is now on who is held accountable and aims to tackle crimes committed by those who act for/on behalf of a relevant body. In summary, the rules will hold corporate bodies liable where it can show facilitation of tax evasion.

For recruitment agencies, the Criminal Finances Act 2017 extends to individual consultants that recommend or refer to providers who promote various tax avoidance schemes.

Our industry has had many legislation changes over the past 18 months, especially with the introduction of the ‘off-payroll reform’, and we have seen a dramatic and disturbing increase of alternate umbrella solutions that provide dodgy tax-handling and avoidance schemes.

Professional Passport has highlighted two ways in which consultants can breach the new rules when accepting cash incentives for introducing such schemes:

  • Undisclosed payments

It is not uncommon to see non-compliant providers offer anything from £350 – £750 for referrals; and agencies now need to ensure that steps are in place to stop consultants receiving individual “brown envelope” payments as a non-disclosed referral bonus now meets the test for tax evasion. The corporate body can be held liable for any unpaid taxes from the individual employee unless it can show that reasonable checks are in place.

  • Acknowledgement that the worker is benefitting financially as a direct result of reduced tax

Recruiters who explicitly seek a provider based upon the highest retention, with such promises of 80%-90% take home, will be condemned as an advocator of tax avoidance schemes. All compliant providers operate within the same guidelines, and therefore those companies whose returns are significantly greater will be difficult to defend in line with these new rules.

And with HMRC winning most of their cases in 2016/17 against tax avoidance, and having significantly increased their intelligence on compliant/non-compliant, is it worth playing with fire and facing potentially two years in prison alongside unlimited fines?



Preferred Supplier Lists are required to make sure that your contractors are not using tax-evasion umbrella companies. Due diligence is essential for suppliers and the recruitment agency must show that they have reasonable preventive measures in place to stop their contractors joining these unreliable companies. Working with umbrella companies that are regularly audited by professional trading bodies such as Professional Passport, PRISM, APSCo or FCSA will provide reassurance that your consultants and candidates will not get caught up in the non-compliant crossfire.

Cloud9 Umbrella is working ferociously in the industry to provide a fully compliant, professional and transparent service. We combat against those providers who falsely offer 90% retention to give our clients honest tax advice and a transparent, professional payroll solution. If your agency would like more information regarding how Cloud9 Umbrella can provide a straight-talking, compliant and full PAYE solution to support your candidates, then please give Natasha a call on 0207 078 0212 today.