Two Directors of One Stop Recruitment (OSR) have been jailed after keeping their employees’ tax, as well as not paying VAT, further highlighting the need for standardisation in the industry.
Mahmud Hussain and Iftekhar Rehman used the Pay As You Earn (PAYE) system to deduct Income Tax and National Insurance Contributions (NICs), but instead of paying HM Revenue and Customs (HMRC), they kept the money.
Last month Adrian Marlowe, Director of Standards in Recruitment (SiR), spoke to Recruitment Grapevine about why the industry needs standardisation, saying: “It’s fair to say that public perceptions of the recruitment industry are already less than we’d like them to be.” Incidents such as these only further blemish the sectors reputation.
John Randall, Engagement Director at Standards in Recruitment, continued: “This case is precisely why the industry as a whole needs a common set of accreditation guidelines which cover not only internal procedures and processes but also a legal audit of an organisation.
“The best recruitment agencies in the business offer their clients complete trust in how they do business – cases like this can slowly erode that trust but also undermine the reputation of the sector as a whole. There are hundreds of not just reputable but highly responsible and dedicated recruitment providers in the country. An independent set of standards allows them to set themselves apart.”
An HRMC investigation into OSR uncovered that they also hadn’t paid employer NICs or VAT.
After visiting their property: “HMRC officers found payroll details for 150 employees, who wrongly thought that their tax and NICs totalling £127,033 had been paid to HMRC. Further investigations also found that £118,311 was owed in unpaid VAT,” the Peterborough Telegraph reports.
Paul Barton, Assistant Director, Fraud Investigation Service, HMRC, said: “Hussain and Rehman used their employees Tax and National Insurance to fund the business at their expense.
“In addition Hussain and Rehman failed to pay the VAT that was owed, giving them an unfair advantage over their competitors and other honest businesses that pay what is due.”
Marlowe warned of “dire consequences” if the industry didn’t bind together: “Some may question the time and effort it would take to adopt a set of universal standards in recruitment but it needn’t be complicated or costly. We just need consensus, collaboration and the will to adopt and implement them.”
A similar incident occurred in November 2015, with an employee at First Choice Recruitment stealing £4,032 of holiday pay from clients.
This article first appeared in Recruitment Grapevine on 12th January 2016