If you are using or thinking about using a payroll intermediary or a labour supplier then HMRC’s guidance on the due diligence is important reading. After all, there’s compliance and then there’s compliance!!
The guidance makes sobering reading, threatening all sorts of penalties from tax and NI charges to paying the VAT for suppliers that go bust, and here’s the kicker the guidance tells you:
“We can’t tell you exactly what checks you should make because these will vary depending on how your business operates”!!
So let us help you. Below is a summary of the sort of things you should be asking your construction intermediary:
For the company:
- Please confirm that your companies tax affairs are up to date. As part of continuing to work with your supplier this request should be sent every three months
- Please confirm that your company has all appropriate licenses in place to supply labour
- Ask your supplier for a copy of their VAT registration certificate so that you have HMRC document confirming that you are registered for VAT.
With regard to checking the supply chain:
- Consider very carefully any contractual arrangements that allow your supplier to outsource their services to another company without your knowledge.
- Ensure that any travel and subsistence arrangements between the workers and your supplier comply with HMRC guidelines.
- Especially off-shore arrangements!
- Seek evidence that your supplier continuously reviews the working practices and contractual arrangements for workers supplied to you, to ensure they are genuinely acting in self-employed arrangements.
- And ask for evidence to see if any agency rules apply.
- Ask for confirmation that your supplier complies with employment intermediary reporting requirements and confirm where relevant reports are submitted to HMRC.
