Businesses using labour supplied by third parties are putting themselves at financial and reputational risk unless they check out their labour supply chain, warns updated guidance in which HM Revenue & Customs reveals it continues to find non-compliance and fraud across business sectors where labour providers are used.

‘Use of Labour Providers: advice on due diligence’ provides guidance on the checks that should be undertaken in four key areas in order for a business to ensure –

  • its labour supplier is legitimate and does not have a history of non-compliance
  • it understands and approves the labour supply chain
  • agency workers are paid their contractual rate and that it complies with the National Living Wage and National Minimum Wage
  • it is doing all it can to eradicate modern slavery and illegal working in its supply chain

Guidelines explain how to undertake the checks and explain what can happen if they are neglected. Other sections explain –

  • how to tell HMRC about payroll outsourcing
  • verifying Vat registration details
  • reporting concerns about potential compliance issues
  • reporting concerns about exploitation