Before you sign another labour-supply contract, ask who is carrying the tax risk

The cheapest labour quote is not always the cheapest option. Sometimes it is cheap because the tax risk has been moved somewhere the client has not properly checked.

Construction businesses need to know exactly who is carrying PAYE, CIS, VAT, payroll, worker status and record-keeping responsibility before they sign another labour-supply or payroll contract.

If a supplier is promising savings without clear evidence, directors should slow down. The right question is not “how much cheaper is it?” The right question is “what has to be true for this saving to be lawful?”

If the answer depends on vague wording, disguised status, missing VAT, unclear worker control or paperwork that does not match site reality, the business may be buying exposure instead of buying labour.

HMRC will not only look at the contract in isolation. It may look at invoices, timesheets, payment flows, worker communications, supervision, bookkeeping, VAT treatment, CIS/PAYE position and what the client knew or should have known.

Practical checks

• Who employs or pays the worker?
• Who controls the worker on site?
• What exactly is being supplied?
• Why is VAT applied or not applied?
• Does the contract match invoices and real working practice?
• What evidence would be available in an HMRC enquiry?
• Has the supplier provided comfort, or actual proof?

Genius can review labour-supply contracts, supplier routes, VAT/PAYE/CIS treatment and bookkeeping evidence before the business signs or renews.

If a labour model looks attractive because of the tax saving, call Genius before you inherit the risk.

Contact Genius: 0207 700 2000 / hello@geniusmoney.co.uk.