HMRC's approach to labour supply chain risks
Explains the ways that HMRC works to tackle tax risks and illegal working practices in labour supply chains.
HMRC is committed to tackling tax risks and illegal working practices in labour supply chains, across all business sectors. The work that we do helps to:
- fund essential UK services
- stop the exploitation of people
- create a level playing field for compliant businesses
We continually work to inform legislation and strengthen our own processes to enable us to address non-compliance within LSCs. Examples include the:
- introduction of the VAT domestic reverse charge
- reform of the off-payroll working (IR35) rules
- announcement of legislation to tackle non-compliance in the umbrella company market
- introduction of the publication of promotors of known avoidance schemes
The activity that HMRC undertakes to identify and address non-compliance includes:
- working with partners such as the National Crime Agency, police and the Gangmasters Labour Abuse Authority (GLAA) to investigate issues and enforce laws
- undertaking supply chain investigation and monitoring
- using legislative powers and those established through caselaw to address tax risks to prevent and recover tax losses
- prosecuting those committing and facilitating tax evasion
As well as responding to non-compliance, HMRC also works to promote the importance of reducing the likelihood of LSC risks in the longer term. Ongoing activity includes improving understanding of LSC risks and the importance of effective supply chain assurance by:
- publishing guidance on the GOV.UK website
- sharing information on supply chain risks to raise awareness and inform businesses for example, where HMRC sees particular trends or increases in risk
- engaging with businesses who want to reduce risks in their supply chain
- working with other government departments, organisations and businesses to improve the health of labour supply chains, economically, environmentally and socially