Skip to content
Solved

ESM10032 | off-payroll working legislation: Chapter 10, ITEPA 2003 (from 6 April 2021): basic principles: recovery from other persons – steps clients and agencies can take to secure labour supply chains

From HM Revenue & Customs · Employment Status Manual

The intention behind the provision is to incentivise and drive up the use of compliant labour supply chains to ensure the rules are applied as intended. To help prevent the liability being recovered from agency 1 or the client, those parties may wish to take steps to ensure the parties that are contracted in their labour supply chains are compliant.

It is in the interest of the client and/or agency 1 to check carefully who they are dealing with. It is good commercial practice for businesses to carry out checks to establish the credibility and legitimacy of their supply chain.

A judgement on the integrity of the labour supply chain and the suppliers, customers and goods or services within it would be expected to be made. This could include checking carefully who they are dealing with in relation to the nature of the supply to establish the integrity and credibility of those within the labour supply chain, considering:

  • What is the agency/labour supplier’s history in the trade?

  • Is the agreed contract price for the supply of labour lower than market value without a clear explanation for why?

  • Have normal commercial practices been adopted in negotiating prices?

  • Have they been asked to make payments to third parties other than the party the client is contracting with or asked to make payments to an offshore bank account? If so, is there a valid reason for that?

  • Is a newly established agency with minimal trading history offering to supply labour cheaper than a long-established agency?

  • Is this the same agency/labour supplier as previous, but operating under a different name? If so, why?

  • Is the party insisting that they can further subcontract the labour supply? If so, why?

Suitable checks to secure the labour supply chain will vary depending on the circumstances and length of supply chains. Each organisation should consider what checks are suitable in their individual circumstances.