Employers lean towards hire of temporary staff, and untrue direct tax declarations could become a criminal offence
A recent report reveals a decrease in business confidence has caused employers to start hiring temporary staff instead of permanent. Plus, HMRC proposes criminal action against those who make reckless direct tax declarations.
UK hiring trends
The June ‘UK Report on Jobs’ shows subdued business confidence driving a preference for short-term staff. Temporary staff billings rose at the steepest rate in over three years, while permanent staff appointments continued to decline, although at a much slower pace than in May.
Overall demand for staff weakened at a quicker rate, largely reflecting a steeper reduction in permanent job vacancies. At the same time, an increase in redundancies contributed to a further marked increase in candidate availability. Despite this, pay trends improved, with employers raising starting salaries and wages at a faster rate as they sought to attract and secure candidates with sought-after skills.
The KPMG and REC, ‘UK Report on Jobs’ is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
The latest survey data showed that the number of people placed into permanent positions fell at a marginal pace – the softest in three months, while temp billings rose at the quickest rate since April 2023. These trends were often linked to wider economic uncertainty and cost considerations, which have driven a greater preference for short-term staff and projects.
UK recruitment consultancies signalled further increases in the rates of starting pay for both permanent and temporary workers at the end of the second quarter as efforts to attract top talent had placed upward pressure on pay offers.
Nursing/medical/care and engineering were the only two monitored sectors to see improvements in demand for permanent staff in June. Retail, meanwhile, posted the sharpest reduction in permanent vacancies.
Temp vacancies rose sharply in the blue-collar sector and solidly in the engineering sector. Of the eight other monitored areas that posted a reduction in temp staff demand, the most dramatic falls were seen in the Retail, Nursing/Medical/Care and Executive/Professional categories.
Proposed offence for reckless, untrue tax statements
HMRC have proposed a new criminal offence for making reckless, untrue statements or declarations about what’s known as ‘direct taxes’ – Income Tax, National Insurance and the like. For Customs and Excise and VAT (‘indirect taxes’), it is already possible to prosecute individuals who make untrue statements or submit incorrect documents either knowingly or recklessly, without the need to prove dishonesty. The penalties for such offences can be severe, including substantial fines and imprisonment. The direct tax regime does not currently contain an equivalent offence.
It is proposed that the offence would carry a custodial sentence and/or a fine on indictment, to be decided by the courts. Consideration is being given to following the Customs and Excise rules, which include a maximum sentence of two years and unlimited fines. This differs from the provisions for VAT rules, which provide for a potential custodial sentence of up to 14 years.
HMRC are looking for views on the proposals, which include examples of what they consider to be reckless errors. These proposals include:
- Making a significant relief claim without reading the relevant guidance properly or seeking advice or clarification on the basis that it will ‘probably be fine’.
- A self-employed taxpayer who prepares their own tax return knows they have multiple bank accounts and suspects they have received taxable income therein. They do not check the statements and estimate income for the main account only, omitting income from secondary accounts. They unintentionally file a materially inaccurate tax return.
The document does make the point that carelessness would not be caught in this net, and ‘deliberate behaviour’ would be covered by existing penalty legislation.
The consultation can be found at https://www.gov.uk/government/consultations/proposed-offence-for-reckless-untrue-statements-direct-taxes/introducing-a-criminal-offence-for-making-reckless-untrue-statements-or-declarations-in-direct-tax–3#summary
New proposals to tackle Electronic Sales Suppression
The government is consulting on potential measures that target Electronic Sales Suppression (ESS). Proposals include the introduction of new software standards for Point of Sale systems. Electronic Sales Suppression (ESS) involves businesses using software or devices to manipulate Electronic Point of Sale (EPOS) systems to hide transactions and evade tax.
While precise quantitative prevalence statistics are inherently difficult to capture for hidden fraud, ESS has been regarded by HMRC as a growing area of tax evasion.
HMRC have identified that certain individuals and businesses in Electronic Point of Sale (EPOS)/Mobile Point of Sale (MPOS) supply chains are developing or modifying POS systems to suppress sales to facilitate tax evasion. HMRC believe that ESS is more prevalent in small retail, takeaway and hospitality businesses.
The government is proposing to introduce software standards for the EPOS and MPOS sector, consisting of a set of uniform rules, protocols and compliance requirements to ensure that every system records sales and financial data accurately, securely and in a way that cannot be easily tampered with or manipulated.
The proposed measures include requiring an unalterable and complete transaction log that contains details of every individual transaction and adjustment, indelibly linked together in an encrypted chain using the Standard Audit File for Tax (SAF-T) format to store sales records.
The government would also establish a register of EPOS/MPOS systems sold, transferred, or used in the UK. A certification system would show whether the software complies with the new standards. It would also make it compulsory for small retail, takeaway and hospitality sectors to use compliant EPOS/MPOS systems to record all sales.