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HMRC internal manual

Labour Provider Guidance

From
HM Revenue & Customs
Updated
, see all updates

Interventions: education and due diligence: end user: post visit action

Depending on the scale of operations and findings, recommendations should be made to address any risks or perceived risk.

The end user should be following due diligence checks as described in Labour Provider (LP) leaflet (PDF 316KB). The details obtained can be analysed looking at subcontractors - this may highlight further subcontractors either up or down the supply chain that merit further enquiry.

Post Visit -Due Diligence checks

A range of options are available depending on your findings. You may wish to make recommendations that will help the end user to minimise risks; along the lines of the following examples:

  • Entering a clause in contract (or signed statement) with LP that subcontractors are not permitted
  • If LP is not able to supply enough labour, it is recommended End User engage additional LP rather than leave this to initial LP who may engage third party that may or may not be operating matters correctly - obtain signed statement confirming all workers are provided by LP and no subcontractor labour will be used (without notifying End User)
  • Enter a clause in contract confirming workers provided by LP are not engaged via offshore company
  • VAT detail checks to verify a valid VAT number is being used - Coventry office - 024 7623 7144
  • If not already undertaken, introduce or improve current controls in place to provide an audit trail for workers supplied and hours worked:-
    • Time sheets procedure
    • Introduce daily time sheets to include names, hours worked and signature from worker and foreman. This will provide an audit trail that will confirm:
    • NMW being achieved
    • Identity check to combat fraud
  • Risk for End User is they could lose the right to claim back VAT on invoices connected to fraudulent evasion of VAT by any LP used
  • If wages are paid cash - change to using banking system. This will provide an audit trail of amounts received and evidence of the LP responsible for workers.
  • Due diligence leaflet provides advice on replacement businesses. If new business is supplying same workers as before - End User should obtain an explanation.
  • Does LP have sufficient insurances