HMRC have published a new leaflet entitled 'Use of Labour Providers' which should help all businesses that engage workers through a third party supplier. This is especially the case in the agricultural and food processing sectors, construction, hotels and leisure, security and other labour intensive industries.

The leaflet explains who is responsible for matters such as health and safety training, general training of workers and the provision of security passes (where relevant). It also contains examples of checks businesses can undertake to help establish the credibility and legitimacy of their supplies, customers and suppliers.

Also addressed are issues intended to help tackle tax fraud and to reduce unpaid taxes (especially relating to VAT) that can occur when Labour Providers are involved. Advice includes checking the financial status of any business that provides third party labour as well as investigating whether the workers have the right to be working in the UK.

Businesses that do not carry out appropriate due diligence on transactions connected with fraudulent evasion of VAT can lose the right to recover the VAT incurred on those transactions.