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Relaxation of 'fraudulent documents' defence
by Susie Hughes at 12:07 13/05/14 (News on Business)
Following lobbying by agency group, APSCo regarding the fraudulent documents defence part of the draft employment intermediaries legislation, the Treasury has now confirmed that where an intermediary acts in good faith, it is clearly not fair for them to be penalised.
HMRC also confirmed that this new provision was largely due to APSCo’s lobbying efforts.

Samantha Hurley, head of External Relations and Compliance said: “APSCo had raised concerns that fraud can be very difficult to prove as one would have to establish intent to defraud and also that intermediary 2 would be left without any defence because the tax liability can only transfer to an intermediary that has a direct contractual relationship with intermediary 1.

"In a statement to the Finance Bill Committee, David Gauke, MP, Exchequer Secretary to the Treasury confirmed that where an employment intermediary has acted in good faith it is not fair for them to be penalised and that the relevant clause will bring in a provision that where fraudulent documents have been provided, the party that provided the documents to the employment intermediary is the employer for income tax purposes. This statement is welcomed by APSCo and means that the provision will allow some of our members to reduce their level of risk, as long as they have robust processes in place.

“However, this will still only apply if they are in fact intermediary 1 and our reading of the legislation still suggests that this defence does not protect all employment intermediaries within the supply chain from being penalised when they have in fact, in the Minister’s words “[undertaken] due diligence, asked the right questions, received the necessary assurances and acted in good faith” on the documents provided to them by another party in the supply chain.

"These other intermediaries are left with a transfer of liability over which they have no control and against which they have no defence. We have consequently written to HMRC requesting confirmation of their understanding of this provision. Additionally, based on the Minister’s statement we have also brought this to his attention as he appears not to be aware of the anomaly.”

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Susie Hughes © Shout99 2014

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Relaxation of 'fraudulent docu... Susie Hughes - 13/05
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