Use of Labour Providers: advice on due diligence ? Update to Guidance

01 February 2016

The guidance which was first published on GOV.UK on 30 January 2014 applies where you use labour supplied by a third party, or you supply or make arrangements to supply labour.

HMRC continue to identify incidence of problems with fraud and unpaid taxes through the use of un-vetted or poorly vetted labour providers and has updated this guidance in a bid to help business understand the impact to them of them not carrying out due diligence at the outset of contractual arrangements that provides a business with labour.

It is good commercial practice for all businesses to carry out checks to establish the credibility and legitimacy of both customers and suppliers. However, these checks will need to be more extensive in business sectors where there are greater commercial risks or vulnerability to fraud and other criminality. The guidance urges business “you must seek to avoid involvement in supply chains where VAT or PAYE tax and NIC may go unpaid.”

The guidance highlights issues and questions that should be considered at the outset of all arrangements to ensure that business avoids entering in to deals with high-risk businesses and individuals.