Labour Provider (LP) teams were established following the Morecambe Bay tragedy in 2004. They exist to ensure that businesses and individuals in this high-risk sector pay the right tax at the right time across all Heads of Duty (HOD), and aim to create a level playing field where compliant LP’s are not commercially disadvantaged. Many LP businesses operate to margins where, under normal business practices, it would be impossible to make a profit. The current need for businesses to cut costs has led to an increase in outsourcing of labour, with the greatest change in recent years being in the use of intermediaries. This is now the most significant LP risk area. Many employment businesses are maximising profits using avoidance schemes aimed at minimising PAYE and NICs, and often reducing VAT and CT.
Specialist Investigations (SI) is the only directorate that specifically tackles LP Risk. LP teams are part of SI, covering the whole of the UK. They are integrated multi skilled teams, having developed specific techniques to counter inaccuracies peculiar to the nature of risk, and carry out a wide variety of compliance checks and interventions.
LP activity is divided broadly into Tier 1 (foundation) and Tier 2 (formal intervention) work. Tier 1 work is essentially ‘prevent’ work and largely comprises pre-registration cases where registration refusals stop fraudsters having access to the means by which they can make repayment claims. The other Tier 1 interventions are missing returns and Debt Pursuit work. LP officers undertake debt pursuit work as a result of a Memorandum Of Understanding (MOU) agreed with Debt Management and Banking (DMB).
Tier 2 operational teams concentrate on more investigative activities including follow-up pre-VAT registration checks and visits, employer compliance reviews, Corporation Tax (CT) and Self Assessment (SA) enquiries, VAT audits, veto and verification actions. Tier 2 work also focuses on educating LP customers ‘End-users’ to enable them to adopt due-diligence and discourage involvement in non-compliant supply chains.
LP teams work collaboratively with other teams within SI such as Insolvency and Securities. They also work with external agencies such as the Gangmaster Licensing Authority (GLA), Security Industry Authority (SIA), UK Visas and Immigration (UKVI) and the UK Human Trafficking Centre (UKHTC) and are keen to develop further links both within HMRC and with other organisations to address non-compliance and assist in the protection of workers rights.