Construction businesses beware of GLAA and HMRC crackdown

In a joint effort to combat tax evasion and fraud in industries reliant on complex workforce supply chains, the Gangmasters and Labour Abuse Authority (GLAA) and HM Revenue and Customs (HMRC) have issued a critical fraud alert. Whilst not directly targeted at the construction industry, this alert is essential for businesses that utilise workforce supply chains in various sectors to raise awareness and ensure compliance.

The Gangmasters and Labour Abuse Authority (GLAA) is a UK government agency dedicated to safeguarding and regulating workers in industries prone to labour exploitation and abuse. Their actions have implications for any industry relying on workforce supply chains, including construction, agriculture, horticulture, and food.

The GLAA and HMRC are actively monitoring industries that heavily rely on workforce supply chains for potential tax non-compliance, fraudulent activities, and organised criminal involvement. This crackdown is not exclusive to the construction industry but extends to any sector with intricate labour supply networks.

While the alert is not directly targeting construction, there are potential implications for the industry:

• Supply Chain Complexity Risk: Construction often relies on complex supply chains for skilled and unskilled labour. It is good practice for construction businesses to discharge their duty of care by reviewing their supply chains to ensure they are fully compliant.
• Reputational Risk: Any reports of worker abuse, tax fraud, or non-compliance within your supply chain can harm your reputation. As a result, clients and partners may reconsider their relationship with you leading to a loss of business.
• Due Diligence: Due diligence checks in the construction industry should be thorough and robust. This ensures that construction companies identify any GLAA licensed businesses that are failing to comply with their obligations.
• VAT Compliance Risk: Construction companies often deal with complex VAT issues. Be aware that HMRC can deny VAT input tax if any part of your supply chain is involved in VAT non-compliance.

To read more about our VAT in the supply chain – read our Domestic Reverse Charge (DRC) Guide
Guide to the Vat Domestic Reverse Charge

Call Indigo: We offer comprehensive assistance to businesses grappling with compliance challenges. We conduct compliance assessments, provide tax compliance support, ensure proper documentation and reporting, implement risk mitigation strategies and offer ongoing monitoring. Get in touch at the bottom of the page.

Spread the Word: Share this fraud alert with colleagues and partners in the construction industry to ensure everyone is informed about the potential risks in workforce supply chains.

Conduct Checks: Perform rigorous checks on the credibility, legitimacy, and tax compliance of all GLAA-licensed businesses that supply services to your construction company, either directly or indirectly.

Effective Due Diligence: Tailor your due diligence checks to the size and complexity of your construction supply chain to effectively counter the risk of fraud.

For further information on Supply Chain Due Diligence, visit this government resource.
https://www.gov.uk/government/publications/use-of-labour-providers

If you have concerns related to tax fraud or non-compliance within your construction supply chain, you can report them online at Report tax fraud or avoidance to HMRC.
https://www.gov.uk/

For any further inquiries, please reach out to the GLAA helpline at 0345 602 5020 or email licensing@gla.gov.uk.

Stay informed and take proactive steps to protect your construction business from potential risks associated with tax evasion and fraud within workforce supply chains. Your vigilance is crucial in maintaining the integrity of the construction industry and ensuring compliance with the law.

We are committed to helping your construction business thrive in a compliant and ethical manner.

For inquiries or to request our assistance in navigating compliance challenges related to the GLAA and HMRC crackdown, please fill out the form below, and our experts will be in touch.