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UK – Possible legal challenge to proposed false self-employment legislation

24 March 2014

APSCo, the Association of Professional Staffing Companies, has written to Her Majesty’s Revenue and Customs (HMRC) warning that that it could face legal challenges to the proposed new false self-employment legislation under the Human Rights Act and relevant European Union law.

The professional recruiters’ trade body has raised concerns that its members may be forced to resort to the courts to deal with potentially unquantifiable and uninsurable risk. It is consequently calling on the Government to reconsider how providers of contractors could defend themselves from the actions of dishonest or negligent participants elsewhere in the talent supply chain.

APSCo’s concerns relate to issues it reports that it has raised numerous times with HMRC. The trade association advised that it appreciates the recognition that, in instances where an intermediary has acted in good faith, but has been provided with false documents regarding self-employment status, liability for tax and national insurance will always sit with the entity providing the documents. However the trade association is urging the Government to consider two main areas which relate to the detail of HMRCs intended changes: 

1)      HMRC has assured APSCo that providers of contractors would be able to rely on a defence if they were provided with fraudulent documents. However, APSCo has pointed out that current fraud legislation insists on an intention to deceive rather than simple human error or negligence. APSCo is consequently asking that there should be an automatic defence unless the provider of contractors had acted unreasonably or inappropriately.

2)      At present it appears that a provider of contractors would only be able to exercise a defence where it has a direct contractual relationship with the client. However, within increasingly common multi-intermediary talent supply chains this would leave compliant intermediaries further down the chain with no defence at all.

APSCo’s Head of External Relations, Samantha Hurley said: “We do not believe that this solution provides compliant, professional intermediaries with an appropriate defence against the actions of wholly unconnected businesses over which they have no control, and we urge the Government to consider the effect of these proposals on proportionality – or to put it in lay terms, ‘fairness’ – rules embodied in the Human Rights Act and relevant European law. We also want HMRC to confirm that this proportionality issue has been considered by the Treasury Solicitor or the Attorney General’s office, and if so that it was raised with the Parliamentary Council’s Office, and Ministers and Cabinet assured that there is no legal risk.”

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