Employers who plan to take on more staff for next year’s Olympic and Paralympic Games have been urged to check the credentials of their “gangmasters.”
Firms looking to recruit temporary workers for the games should carry out detailed inquiries into the labour supply chain, says HMRC.
The Government department advises them to ensure, where possible, that the gangmasters are paying VAT and other taxes.
Businesses affected include those in catering, food processing, construction, hotels, leisure and security.
HMRC has warned there is a risk that employers could unknowingly hire workers who are in the UK illegally or are earning below the National Minimum Wage.
This could result in inquiries by HMRC and costs for the business, damaged reputation and even prosecution.
Marie-Claire Uhart, Director of Specialist Investigations, said: “HMRC has found problems with fraud and unpaid taxes in the labour provider field and this might increase as companies employ more casual labour for the Games.
“HMRC routinely tackles attempts to defraud the Exchequer, including the use of false invoices and hijacked VAT registrations.
“Midlands businesses that use labour providers can help prevent these forms of tax abuse – and avoid involvement in fraudulent supply chains – by being alert and asking the right questions.”
Businesses have been urged to establish whether the labour provider needs or has a Gangmaster Licensing Authority (GLA) licence, the history of the operation, and whether it is a live company on the Companies House register.
They are also asked to consider visiting the trading premises, if they obtain workers from other labour providers, and whether their proposed fees are realistic, allowing the business to meet statutory minimum wage and tax obligations and still make a profit.
Other areas of investigation could include whether the gangmasters have Employers’ Liability Insurance.