Modern slavery statement
This statement details the work HMRC is currently undertaking to eliminate modern slavery in our supply chains.
Foreword
In September 2021, we published our first modern slavery statement. This publication followed on from the Government modern slavery statement 2020 which earmarked the UK as the first country to publish their own modern slavery statement. The pervasive evils of modern slavery have no place in society. However, it is not in merely acknowledging this but, as our former Prime Minister noted, in ‘matching words with actions’ that we can begin to actively drive it out of our supply chains.
These annual statements will capture our actions and detail the steps we have taken to safeguard against the presence of modern slavery in our contracts and their supply chains, while acknowledging there is always more work to be done. We will also outline our goals for the upcoming year, and how we plan to measure our progress using quantitative Key Performance Indicators (KPIs) (see section 5 for more details). Any significant organisational or process driven changes that have taken place as part of our coordinated approach to tackling modern slavery will also be reflected in this report.
The prevalence of this crime and the complexity of global supply chains means that no supply chain is ever truly immune to the risk posed by modern slavery. As such, we will outline the measures already in place to prevent us from engaging with, or inadvertently supporting, organisations where modern slavery is present. Where risks are identified, we will also explain how we intend to monitor or mitigate them.
Our broader work on tax compliance and fraud further allows us to protect vulnerable workers and those potentially being exploited, both within our supply chains and in wider society. As an organisation, we work hard to identify and rapidly respond to threats that may give rise to social harms, significant tax loss, and/or pose a fraud threat to the Exchequer.
We have a vital role to play in ensuring taxpayer’s money does not unknowingly fund this abhorrent criminal activity, and our approach must continue to be one of sustained vigilance and the application of ever more stringent regulations.
Jim Harra
First Permanent Secretary and Chief Executive
1. HMRC structure and supply chains
For details of our organisational structure and strategic objectives, please refer to our Modern Slavery Statement 2021.
We are ultimately accountable to the Chancellor of the Exchequer, who oversees the ways in which we conduct our business. The Chancellor has delegated responsibility for overseeing HMRC to the Financial Secretary to the Treasury, who is currently the Rt Hon Lucy Frazer MP.
The HMRC Charter
The HMRC Charter explains what our customers can expect from us and what we expect from them. You can also find out more information about HMRC in our Annual Report and Accounts 2021 to 2022.
Reporting period
This statement covers our activities from 1 April 2021 to 31 March 2022. All our offices are in the UK, but we also work closely with other tax authorities around the world.
For the 2021 to 2022 financial year:
£2.56 billion was spent through our supply chains
369,791 invoices were processed by our teams
62,709 HM Revenue and Customs (HMRC) full time employees at the end of March 2022
HMRC’s supply chain facts and figures
Our commercial function sits within the Chief Finance Officer (CFO) Group and employs 226 (full time equivalent) skilled professionals, 76 of those are appointed centrally through the Government Commercial Function, which is part of the Cabinet Office. The commercial function is responsible for all commercial arrangements covering our external spend with suppliers, and the strategic management of our supply chain.
Our top 5 categories of spend in this year were:
| Category | Expenditure | Description |
|---|---|---|
| 1. Information technology | £1,436 billion | This includes managed services provided by suppliers for HMRC’s internal and external business requirements, which include PAYE and Self Assessment systems. It also includes IT infrastructure, storage and maintenance of data for websites, and customer engagement provisions such as contact centres and IT equipment leasing. |
| 2. HR and professional services | £225 million | This is mainly contingent labour costs, including support to the Technology Sourcing Programme – a multi-year programme of work to transform how HMRC works with IT suppliers to procure and utilise the latest technologies. |
| 3. Property management | £134 million | This spend reflects the money we have spent on the provision of serviced office accommodation for HMRC’s staff to carry out their day to day responsibilities. |
| 4. Corporate support services | £127 million | This includes print and mail delivery services, inland pre-clearance of imports from the EU, the provision of tax free childcare services, debt collection services and consultancy services. |
| 5. Construction and fit out | £124 million | The ongoing construction and building fit out of HMRC’s new estate including regional centres. The installation of the internal fixtures, fittings and related services, along with refurbishment of retained existing sites. |
As of June 2022, we had 569 contracts with a total contract value of £7,443 million, broken down below by the contract tiering system we use in HMRC. For more information on this tiering system, please see the appendix in Section 5: Our KPI Indicators for 2022 to 2023. We have also provided in brackets the corresponding tiering system used cross government for context, as they segment contracts into Gold, Silver and Bronze.
| Contract tiering | Number of contracts | Total contract value (£ million) |
|---|---|---|
| 1 (Gold) | 25 | 5,316 |
| 2 (Silver) | 62 | 1,149 |
| 3 (Bronze) | 142 | 874 |
| 4 (Bronze) | 340 | 104 |
Our direct suppliers operate from the following locations:
| Region | Contracts | Expenditure (£ million) |
|---|---|---|
| United Kingdom | 541 | 7,309 |
| United States | 17 | 11 |
| Europe | 9 | 122 |
| Rest of the world (Australia, Canada, Singapore, Israel) | 2 | 0.387 |
The vast majority of our prime suppliers are registered in the UK and many, given their size and scale, have global operations and supply chains.
All HMRC contracts over £10,000 are published on GOV.UK at Contracts Finder.
Internal governance of anti-slavery activity
Our internal governance processes in relation to anti-slavery activity can be found in our previous year’s Modern Slavery Statement 2021.
2. Policies in relation to modern slavery
Promotion, implementation and enforcement of Procurement Policy Note
The overarching government policies we align to, and comply with, are outlined in the UK government modern slavery statement.
Procurement Policy Note PPN 05/19, and the associated guidance, sets out the action departments must take to ensure modern slavery risks are identified and managed in government supply chains.
Since 2021, Commercial staff have implemented PPN 05/19, and will continue to carry out the following additional measures in support of its guidelines:
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reviewing and amending our procurement guidance and documentation to include modern slavery obligations
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including modern slavery questions within our standard tender questionnaires to assess supplier compliance with the legislation
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adding modern slavery clauses to our standard terms and conditions of contract, in addition to our clauses on national minimum wage and human rights, which suppliers must agree to before the contract is awarded
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raising awareness of modern slavery and human rights abuses through interactive training sessions adapted from the Home Office’s best practise training model
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inviting our key suppliers to complete the Modern Slavery Assessment Tool (MSAT) annually
In addition to this activity, we have worked hard to:
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ensure contract management processes and related documents align with this guidance and other Cabinet Office guidance
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apply contract management oversight, working with our suppliers to address any identified risks and resolve issues
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refresh our supply chain maps with our directly contracted suppliers, with consideration to key subcontractors, to identify those at high risk of modern slavery
Promotion, implementation and enforcement of HMRC specific policies relevant to modern slavery
Modern slavery and illegal working are behaviours that may facilitate the abuse of tax regimes, the Benefits and Credits systems, and National Minimum Wage (NMW) legislation; although we acknowledge NMW breaches do not directly indicate modern slavery in the vast majority of instances. These behaviours target and exploit the most vulnerable in our society.
It is often the case that employers or individuals facilitating modern slavery and illegal working, and/or exploiting their workforce, will also be tax non-compliant.
Organised Crime Groups (OCGs) can also be involved, and as such, the impact to HMRC from modern slavery and illegal working cuts across multiple tax regimes.
As part of its ‘Promote, Prevent, Respond’ approach to compliance, our Customer Compliance Group (CCG), including the Fraud Investigation Service (FIS), targets and responds rapidly to threats that may bring about significant social harms, and/or present a serious threat of fraud to the Exchequer. This co-ordinated compliance activity manifests mainly within the NMW, VAT, PAYE and National Insurance contributions (NICs) regimes. Among other initiatives, CCG Colleagues are addressing labour fraud, including modern slavery and illegal working by:
- devising strategies to tackle the risks to HMRC linked to modern slavery, such as: abuse of tax regimes, the Benefits and Credits systems, and NMW legislation
- partnering with external groups to promote protections for workers and improve compliance across the spectrum
- continuing partnering with the Security Industry Authority in raising standards across its Approved Contractor Scheme by providing oversight and governance, and ensuring integrity of workforce engagement
- partnering with the Gangmasters and Labour Abuse Authority (GLAA) in maintaining standards for its licensing scheme by providing oversight and governance, and ensuring integrity of workforce engagement
- building public and private sector capability in the field of Supply Chain Due Diligence, reducing opportunities for Organised Labour Frauds within complex Supply Chains
- supporting HMRC Commercial Colleagues in vetting HMRC’s own supply chains
HMRC’s role in supporting government’s wider economic aims and making it harder for people to break the rules
We are a key partner in the government’s agenda to combat modern slavery. We work in close collaboration with other law enforcement agencies, using our unique civil and criminal powers to tackle the illicit profits that individuals make from the exploitation of others.
HMRC partners with other government agencies including the Home Office, to tackle tax avoidance within supply chains related to forced labour. Further details can be found in our Modern Slavery Statement 2021.
3. Risk assessment and due diligence
Our approach to prioritising anti-slavery activity
The government has developed the Modern Slavery Assessment Tool (MSAT) – a free modern slavery risk identification and management tool for public bodies to use with their suppliers.
Over the past 10 years, HMRC have also partnered with NQC using their Corporate Assessment of Environmental, Social and Economic Responsibility (CAESER) online supplier assessment tool to identify risks with our suppliers and their supply chains.
HMRC invites its most critical suppliers to complete the annual CAESER assessment which includes the MSAT. This includes suppliers of our Tier 1 (Gold) contracts and most of our Tier 2 (Silver) contracts. We exclude our software contracts as they are at low risk of being impacted by modern slavery.
Findings from the 2021 to 2022 MSAT
During the 2021 to 2022 survey, 55 suppliers to HMRC completed the MSAT tool. Results showed that of these responding suppliers:
95% ensure workers have access to a grievance mechanism to report incidents or suspected incidences of modern slavery
82% have taken steps to map their supply chains which is an increase of 16% from last year’s campaign
40% actively work with Non-Government Organisations (NGOs) or other businesses to prevent and mitigate modern slavery
Process for monitoring modern slavery risks
The results of the MSAT, as well as any findings from due diligence activities we conduct, provide valuable insights about modern slavery related risks in the supply chain. These insights allow our commercial contract managers to closely monitor suppliers.
Any areas for supplier improvement will be identified by commercial contract managers who will work with suppliers to implement any remedial activity. The way we work with each supplier on modern slavery will be tailored by the results of their MSAT report.
Plans to strengthen risk assessment proces
We will continue to map our supply chains, utilise the Modern Slavery Prioritisation Tool and will continue to invite those that are deemed high risk to complete the MSAT on an annual basis.
We will continue to encourage suppliers to create policies and processes that encompass recommendations from their MSAT report on modern slavery, both within their internal operations and their external supply chain. We have enhanced our terms and conditions of contract to assure supplier and supply chain compliance with the Modern Slavery Act 2015.
Our commercial teams have set specific goals for the coming year and will implement Key Performance Indicators (KPIs) to monitor and measure our progress. These goals and KPIs will continue to be developed to reflect any change of focus as our journey to tackle supply chain risk evolves.
General findings from the MSAT over the last 2 years:
100% of suppliers required to do so, have confirmed they have a modern slavery statement
82% of suppliers who completed the Modern Slavery Assessment Tool (MSAT) have taken steps to map their supply chains to identify modern slavery risks
71% of suppliers have trained employees on the International Labour Office (ILO) Forced Labour Indicators
62% of suppliers conduct audits on their suppliers to investigate working conditions
| TITLE | Percentage |
|---|---|
| Suppliers that confirmed they have a modern slavery statement when required to do so | 100 |
| Suppliers who completed the Modern Slavery Assessment Tool (MSAT) that have taken steps to map their supply chains to identify modern slavery risks | 82 |
| Suppliers that trained employees on the International Labour Office (ILO) Forced Labour Indicators | 71 |
| Suppliers that conduct audits on their suppliers to investigate working conditions | 62 |
Identifying risk areas for HMRC
We use several sources to identify where our supply chains may harbour a modern slavery risk which we outlined in Section 3 of our Modern Slavery Statement 2021.
Spend through our supply chain 2021 to 2022
Using these data sources as well as other risk management tools and techniques, we can identify and manage supply chain risks. In doing so, we can also identify what proportion of our total spend is in high-risk modern slavery sectors:
| Total spend | £ million |
|---|---|
| All suppliers (100%) | £2,560 |
| Suppliers considered to be in modern slavery high risk areas (15.83%) | £405.3 |
Our high-risk areas of spend can be broken down as follows:
| Breakdown of high-risk area spend by system category | Spend in £ million | % of total spend |
|---|---|---|
| IT hardware and software | 158 | 6.17 |
| Building works | 124 | 4.84 |
| Furniture, fixtures and fittings | 55.8 | 2.18 |
| Security services | 57 | 2.23 |
| Office supplies | 2.1 | 0.08 |
| Cleaning and catering | 8.2 | 0.32 |
| Uniforms | 0.2 | 0.01 |
For details of our standard approach to managing supply chain risk, supply chain due diligence processes and also how we have implemented social value as part of our procurement policy, see Section 3 of our Modern Slavery Statement 2021.
Implementation of responsible purchasing practices
We continue to assess how we procure and manage contracts, identifying new ways to reduce modern slavery risks. We plan to keep improving how we monitor, measure and respond to risks and the way we implement anti-slavery initiatives. We have implemented both the Procurement Policy Note (PPN) 07/20, and the successor PPN 08/21 which are designed to promote Prompt Payment practices with our existing and recently contracted suppliers.
For details of our obligations as a recognised public authority in regard to reporting modern slavery, and the process we must follow when it has been identified, please see Section 3 of our Modern Slavery Statement 2021.
To find out more about the wider programmes we are involved in, as well as other collaborative initiatives with Cabinet Office and Non-Government Organisations (NGOs) in the UK, as well as other government departments, see Section 3 of our Modern Slavery Statement 2021.
4. Training and Awareness Raising
Training for staff
In addition, 72% of commercial staff completed the ‘Tackling modern slavery in supply chains: PPE case study’ training which aims to increase the understanding of commercial professionals on the steps they should be taking at each stage of the commercial lifecycle to identify and mitigate modern slavery in supply chains. There is a particular focus on how to monitor and assess supply chains for labour rights issues using PPE as a case study.
68% of commercial staff have already completed the Chartered Institute of Procurement and Supply (CIPS) Ethical Procurement and Supply training this year. The training is delivered as e-learning, covering human trafficking and modern slavery. The aim is to build participant understanding of the prevalence of modern slavery and ensure they recognise their responsibility to identify modern slavery and unethical activities in supply chains. Our recorded completion rate this year is not as high as expected. This is largely due to our manual reporting process and we are already taking steps to address this so we can provide a more robust picture on completion in our next statement.
All our customer facing staff in FIS complete a mandatory Modern Slavery Awareness e-learning package which covers the indicators of slavery and trafficking, and what to do if staff suspect this. Further details on this learning can be found in last year’s Modern Slavery Statement 2021.
We continue to run in-depth virtual workshops to raise awareness of the recent Social Value Model created by the Cabinet Office, which include elements of modern slavery policy implementation during contract awards. These workshops teach our commercial staff how to effectively utilise questions in order to audit suppliers successfully, ensuring ethically sourced goods and services.
5. Commercial goals and KPIs
This section provides an overview of HMRC’s goals and KPIs. These goals will help us to strengthen the way we tackle modern slavery, and the KPIs will measure our progress.
Our commercial goals from the 2021 Modern Slavery Statement
| Goal | Deadline | Status |
|---|---|---|
| Assign the Anti-Slavery Advocate role | August 2020 | Complete |
| Create Modern Slavery Working Group | September 2020 | Complete |
| Review HMRC procurement policies and processes to align with central guidance | November 2020 | Complete |
| Invite suppliers to complete the MSAT | March 2021 | Complete |
| Complete staff training and awareness sessions | May 2021 | Complete |
| Receive and analyse MSAT results | June 2021 | Complete |
| Identify applicable high risk Tier 1 and Tier 2 [1] and invite them to complete the 2021/22 MSAT | September 2021 | Complete |
| Implement HMRC modern slavery KPI’s | September 2021 | Complete |
| Publish HMRC modern slavery statement | September 2021 | Complete |
| Enhance HMRC’s terms and conditions of contract to include the requirement for suppliers to conduct social audits (where they or their supply chains are at high risk) in new contracts | From December 2021 | Complete |
2021 to 2022 KPIs and current position
Commercial capability
| KPI reference | Indicator | Measure | Current position |
|---|---|---|---|
| MS KPI 1 | All Commercial staff will have undertaken the annual CIPS Ethical Procurement and Supply e-Learning (or recommended equivalent) | 90% of staff to complete annually | 68% complete |
| MS KPI 2 | MSAT modern slavery awareness training available to staff annually | Provision of annual refresher training | Completed |
| MS KPI 3 | To change training to an annual requirement and make staff aware of need to complete modern slavery training and awareness sessions annually | Make training mandatory to complete annually | Completed |
| MS KPI 4 | Commercial staff to complete the ‘Tackling modern slavery in supply chains: PPE case study’ training | 80% of all Commercial staff by end of the 2021 financial year | 72% complete |
Risk assessment and management
| KPI reference | Indicator | Measure | Current position |
|---|---|---|---|
| MS KPI 5 | Supply chain mapping is completed annually for all Tier 1 and 2 [1] contracts and contracts identified as high-risk of modern slavery | 80% of Tier 1/Tier 2 and high-risk contracts | 85% have been mapped |
Due diligence processes
| KPI reference | Indicator | Measure | Current position |
|---|---|---|---|
| MS KPI 6 | MSAT will be completed annually for all existing Tier 1 and 2 [1] contracts and contracts identified as high-risk of modern slavery (software licence contracts not included) [2] | 80% completion | 2021 Campaign Completion rate: 68% |
| MS KPI 7 | Action plans will be developed to manage risks from MSAT and work with the suppliers to implement recommendations from the MSAT | 80% of all agreed MSAT actions completed | In progress |
| MS KPI 8 | HMRC commits to the government’s prompt payment policy, to pay undisputed and valid invoices from SMEs [3] within 5 days and all undisputed and valid invoices for all suppliers within 30 days | 90% of undisputed and valid invoices from SMEs within 5 days and 100% of all undisputed and valid invoices within 30 days | 98.5% paid within 30 days |
| MS KPI 9 | Prompt payment assessment methodology will be applied to in-scope procurement exercises (apart from Cabinet Office approved exemptions) | 100% of in-scope procurement exercises | Completed |
Notes:
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Our contracts are Tiered (1 through to 4) relative to the strategic nature of the contract. We determine the strategic nature of a supplier using criteria including risk, spend, scope, contract duration, and alignment to our departmental objectives. Tier 1 is equivalent to other central government departments ‘Gold’ contracts. Tier 2 is equivalent to a ‘Silver’ contract. Tier 3 and 4 are equivalent to ‘Bronze’ contracts.
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Licence contracts refer to software licences provided to HMRC by suppliers acting as resellers of Original Equipment Manufacturers (OEMs) products. As such, they are excluded from having to complete the MSAT.
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SMEs are Small and Medium Enterprises. An entity qualifies as either small or medium if it meets the staff headcount for that class and one (or both) of the financial limits set out in the following table. Where the entity is a member of a group, or has an associated entity, these limits apply to the whole group and not the specific entity.
2020 to 2021 reflection and forward look to 2022 to 2023
In 2020-2021 HMRC took several steps to safeguard against the presence of modern slavery in our contracts and their supply chains. We have had some successes, in the following areas:
- we have raised awareness of modern slavery with our staff and our suppliers by developing and embedding new policy guidance and training
- we have mandated modern slavery training for all our commercial staff and contract managers
- we have conducted supply chain mapping for all our key contracts plus smaller contracts considered to be at risk
- we have started to develop action plans with our suppliers to address risks highlighted from the MSAT process
- we have utilised existing prompt payment processes to measure our performance
- we have ensured prompt payment methodologies were applied in our contracting process
- we have put processes in place to monitor and measure compliance with new policies
Despite these advances, we acknowledge that there is more work to be done to actively safeguard against modern slavery in our supply chains. While we did complete all of the activities outlined in our ‘commercial goals’ table above, we have identified several areas of focus for next year, detailed below. The complex global marketplace, with its ever more intricate supply chains, requires us to develop more robust practices in order to counteract the risk posed by modern slavery.
Modern slavery unfortunately remains a modern issue in broader society, and modern issues need modern solutions. Particularly, for the coming year we are focusing our sights on areas that have not progressed as much as we would have liked in 2021 to 2022, as well as carrying out high priority reviews of the ways we capture and record key training.
In 2022 to 2023 we intend to:
- address areas where we have fallen short of our above listed KPI’s from last year, with specific focus to KPI 1, 4 and 6
- ensure we continue to improve on areas where we have succeeded last year
- develop and enhance our activities to further assure our supply chain and create more robust safeguarding processes
Our goals in the upcoming year will centre on achieving the following commitments:
Commercial capability
| KPI reference | Indicator | Measure |
|---|---|---|
| MS KPI 1 | All Commercial staff will have undertaken the annual CIPS Ethical Procurement and Supply e-Learning (or recommended equivalent) | 90% of staff to complete annually |
| MS KPI 2 | MSAT modern slavery awareness training available to staff annually | Provision of annual refresher training |
| MS KPI 10 | New Commercial starters, and those that did not complete in 2021/22 to complete the ‘Tackling modern slavery in supply chains: PPE case study’ training | 95% of all Commercial staff by end of the 2022/23 financial year |
Risk assessment and management
| KPI reference | Indicator | Measure |
|---|---|---|
| MS KPI 6 | MSAT will be completed annually for all existing Tier 1 and 2 [1] contracts and contracts identified as high-risk of modern slavery (software licence contracts not included) [2] | 80% completion |
| MS KPI 7 | Action plans will be developed to manage risks from MSAT and work with the suppliers to implement recommendations from the MSAT | 80% of all agreed MSAT actions completed |
| MS KPI 8 | HMRC commits to the government’s prompt payment policy, to pay undisputed and valid invoices from SMEs [3] within 5 days and all undisputed and valid invoices for all suppliers within 30 days | 90% of undisputed and valid invoices from SMEs within 5 days and 100% of all undisputed and valid invoices within 30 days |
Notes:
- Our contracts are Tiered (1 through to 4) relative to the strategic nature of the contract. We determine the strategic nature of a supplier using criteria including risk, spend, scope, contract duration, and alignment to our departmental objectives. Tier 1 is equivalent to other central government departments ‘Gold’ contracts. Tier 2 is equivalent to a ‘Silver’ contract. Tier 3 and 4 are equivalent to ‘Bronze’ contracts.
- Licence contracts refer to software licences provided to HMRC by suppliers acting as resellers of OEMs products. As such, they are excluded from having to complete the MSAT.
- SMEs are Small and Medium Enterprises. An entity qualifies as either small or medium if it meets the staff headcount for that class and one (or both) of the financial limits set out in the following table. Where the entity is a member of a group, or has an associated entity, these limits apply to the whole group and not the specific entity.
| Business type | Maximum number of staff | Annual turnover limit | Balance sheet total |
|---|---|---|---|
| Small enterprise | 50 | €10 million | €10 million |
| Medium enterprise | 250 | €50 million | €43 million |