Using labour providers
Labour providers are agencies that supply temporary workers to meet seasonal and market demand – sometimes called ‘gangmasters’. There is a history of tax fraud and unpaid taxes (especially relating to VAT) through the use of labour providers.
This mainly relates to businesses involved in the agricultural and food processing sectors, construction, hotels and leisure, security and other labour intensive industries.
There are a number of different types of checks that can be carried out by people using labour supplied by a third party to establish the credibility and legitimacy of their supplies, customers and suppliers. This includes investigating if the workers have the right to be working in the UK and how workers are being paid.
HMRC suggest that businesses using labour supplied by a third party should carry out checks within the following 4 key areas to ensure:
- your supplier of labour is legitimate and has no history of non-compliance
- you understand and approve the labour supply chain
- agency workers are paid their contractual rate and it complies with the National Living Wage (NLW)/National Minimum Wage (NMW)
- you’re doing all you can to eradicate modern slavery and illegal working in your supply chains.