Labour Supply Chain Risk
Labour Supply Chain Risk
Recently, there has been a marked growth in alternative models, from agencies, to umbrella companies and platforms such as the gig economy - this growth has been driven by client demand for a flexible, immediate workforce to meet the business resource needs, but also the workers themselves often due to lifestyle choices.
This has meant the usual obligations for an employer have become more complicated and often the lines appear blurred between the obligations of a traditional employer and those of an engager choosing alternative resourcing solutions to fill the void of employees. Now is the time for organisations to understand the accompanying risks and implement robust mitigation strategies.
Use of Off-Payroll Labour
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) expires at the end September 2021, and employers will have limited time following this deadline to correct any claims. Read our article explaining what happens as the scheme comes to a close.
HMRC has restated that it will check all claims before payments are made and since December 2020 has published details of all companies and LLPs making furlough claims. It is important to make sure that all claims you have made are checked as any errors must be reported to HMRC and corrected – read more on the HMRC’s CJRS enforcement rules and powers. Our Risk Review Service means you can get your furlough claims checked to avoid penalties and possible naming and shaming by HMRC.
Use of Umbrella companies
There has been renewed attention on the use of umbrella companies. At a basic level an umbrella company is the legal employer of a worker providing their services to a client of the umbrella company.
There has been an increase in prevalence of umbrella companies generally following the IR35 reforms which has seen several organisations switch to contracting with off-payroll workers through umbrella companies rather than engaging directly with the contractor’s Personal Service Company.
Read our recent update on HMRC activity around the use of umbrella companies
National Minimum Wage compliance
An added complication of the use of these new, more flexible employment models, is ensuring National Minimum Wage compliance throughout the labour supply chain. HMRC recently published the latest list of 191 employers “named and shamed” for underpaying National Minimum Wage to over 34,000 workers.
Underpaying National Minimum Wage (NMW) not only impacts employees but also affects employers, not just in terms of costs associated with having to repay underpayments and penalties (of up to 200%), but also from a reputational risk perspective as evidenced by the latest list of organisations identified as underpaying NMW to the employees, which includes some high profile names.
Supporting through HMRC enquiries
The best way to stay ahead of any HMRC enquiry is to ensure compliance throughout your labour supply chain at every stage. We have a range of tools to assess and diagnose any risk your business may face and to ensure that can combat any future issues. This includes our:
If, however, your business is faced with a review or enquiry from HMRC, our Tax Dispute Resolution team has extensive experience of handling tax disputes and can help you to navigate the process of reaching an effective solution with HMRC.
Corporate Criminal Offence (“CCO”)
The Corporate Criminal Offences ('CCO') legislation means that your business can be prosecuted if it fails to prevent an Associated Person facilitating tax evasion. There is no de minimis and all businesses with any form of UK connection are caught. You can even be held liable for fraudulent activity within your supply chain about which you have no knowledge and by the actions of third parties who provide services for or on your behalf.
Our toolkit provides you with everything your organisation needs to build a defence to the CCO legislation, from the CCO Risk Assessment to implementation of next steps.