Recruitment Experts Welcome Potential Of New Legislation To Stop “Phoenixing”

Recruitment industry experts have voiced their support for legislation included in the Finance Bill that could help address the problem of “phoenixing” in the industry. This would be achieved by making recruitment firm directors personally liable for taxes and National Insurance contributions (NICs) not paid by workers supplied by the staffing company, Recruiter magazine has reported on its website.

The Onshore Employment Intermediaries legislation came into effect on 6 April 2014. Under the new provisions, staffing agencies and managed service providers (MSPs) holding contracts with end clients will shoulder the responsibility for taxes and NICs owed by workers they have supplied themselves or provided on a sole trade/self-employed basis through intermediaries. There will be no liability if staffing companies can offer HMRC proof that the workers supplied are genuinely self-employed.

HMRC had confirmed… that recruitment agency directors would be held personally liable if the company itself is unable to assume the liabilities.

In an interview for Recruiter, APSCo external relations chief Sam Hurley said HMRC had confirmed to the organisation that recruitment agency directors would be held personally liable if the company itself is unable to assume the liabilities.

Hurley was among several industry experts who expressed support for this part of the legislation in conversations with Recruiter. She pointed out that the aim of these provisions is to crack down on “phoenixing”, that is to say, the practice among company directors to fold the business in order to escape debts. This is shortly followed by the creation of a new business with the same executives in place. Hurley welcomed this aspect of the legislation, stating that it would ensure fairness and help the recruitment industry shake off negative perceptions resulting from such behaviour.