In April, HMRC contacted approximately 13,000 companies believed to supply security operatives, reminding them of their responsibilities regarding payroll tax compliance and encouraging them to review their supply chains.
From 1 August, HMRC launched the clampdown to target fraudulent companies that are established to appear legitimate but are misappropriating tax and national insurance contributions (NICs) deducted from workers’ pay. Providers who fail to meet their tax obligations may face interest charges and financial penalties.
HMRC said buyers who purchase security services are generally not liable for unpaid tax, provided they carry out appropriate due diligence when engaging suppliers.
Culpable for tax
However, the Night Time Industries Association (NTIA) has already raised concern the liability will extend to buyers under the Employment Agencies Act 1973. It said that venues that fail to carry out due diligence on their security suppliers may be held financially and legally responsible if non-compliance is found.
NTIA CEO Michael Kill told The Morning Advertiser HMRC had made it very clear that they believe doorstaff must be PAYE and not self-employed.
He said this has implications as there are many companies supplying self-employed workers to pubs and bars.
The use of the act means that the liability can extend out to the pub who could be “culpable for the lost tax” he confirmed.
Liability
“It is going be really important for pubs, bars, restaurants and clubs that have security to be aware of where their liability is.” he said.
“The key thing is to make sure you do your due diligence about the company. Make sure you know by phoning the Security Industry Authority or ensuring that when you meet up with them, there is a clear requirement for them to be PAYE for them to be tax compliant.
“You can do checks like getting them to show their PAYE registration number or you can contact HMRC which will be able to help ratify that position. But also over and above that some of the checks you can do is getting people to show you their payslips.”
A HMRC spokesperson told The Morning Advertiser: “We’ve written to providers of security services, highlighting our expectation that their workers are subject to PAYE and NICs and that security business are paying the correct payroll taxes.
“It’s vital these businesses check their supply chains to ensure they’re not being exploited by fraudsters intent on pocketing the tax for themselves.”
HMRC support:
- Guidance around companies ensuring due diligence can be found here - Supply chain due diligence principles - GOV.UK.
- Further guidance around employing agency or temporary workers can be found here - ESM2039 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: the employer for tax purposes - HMRC internal manual - GOV.UK