HMRC has published new guidance for businesses which contract with a third party to either receive or supply the services of workers. The guidance focuses on due diligence businesses need to undertake to ensure the integrity of the supply chain, pointing out that failures could leave businesses open to liability for unpaid tax and NICs and unable to recover VAT, with the ultimate threat of criminal proceedings.
Businesses are advised to carry out risk assessments to identify legal, financial, tax and social obligations for their own business and also for their suppliers. Any risks identified should be removed or mitigated as far as possible.
HMRC’s separate ten-point summary of ‘things you need to know’ advises businesses to carry out regular checks into their suppliers and to keep records of those checks. Principal concerns include:
checking the labour supplier is genuine, is operating in line with minimum wage and employment standards and is sustainable;
verifying the VAT registration number of labour suppliers, to establish that transactions are not connected with VAT fraud;
checking which party should operate PAYE in relation to the workers;
operating the IR35 rules correctly, including being aware of the obligations to decide whether the rules apply to the arrangements; and
making sure the business is aware of the criminal facilitation of tax evasion offences, and how to put procedures in place to prevent offences being committed by anyone acting on its behalf.
HMRC has published new guidance for businesses which contract with a third party to either receive or supply the services of workers. The guidance focuses on due diligence businesses need to undertake to ensure the integrity of the supply chain, pointing out that failures could leave businesses open to liability for unpaid tax and NICs and unable to recover VAT, with the ultimate threat of criminal proceedings.
Businesses are advised to carry out risk assessments to identify legal, financial, tax and social obligations for their own business and also for their suppliers. Any risks identified should be removed or mitigated as far as possible.
HMRC’s separate ten-point summary of ‘things you need to know’ advises businesses to carry out regular checks into their suppliers and to keep records of those checks. Principal concerns include:
checking the labour supplier is genuine, is operating in line with minimum wage and employment standards and is sustainable;
verifying the VAT registration number of labour suppliers, to establish that transactions are not connected with VAT fraud;
checking which party should operate PAYE in relation to the workers;
operating the IR35 rules correctly, including being aware of the obligations to decide whether the rules apply to the arrangements; and
making sure the business is aware of the criminal facilitation of tax evasion offences, and how to put procedures in place to prevent offences being committed by anyone acting on its behalf.
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