Chain, Chain, Chain (of Supply): Due Diligence of Labour Supply Chains

Sarah Hewson examines end client due diligence on labour supply chains

The extension of the IR35 rules to the private sector with effect from 6 April 2021 has highlighted the need to undertake due diligence on labour supply chains. This has been emphasised by HMRC’s increased focus on umbrella company arrangements (broadly, the legal employer of a worker providing their services to a client of the umbrella company), in particular arrangements which it believes have been used to facilitate fraud and tax evasion. Whilst the vast majority of organisations availing themselves of the services of workers (referred to as end users) are not willing participators in fraudulent arrangements, the risk of being so involved is increased where sufficient and robust processes are not in place.