Is your current CIS payroll provider compliant?

Construction businesses are being urged to exercise greater vigilance when engaging payroll service providers, after a recent tax tribunal reinforced legal principles surrounding fraud within supply chains.

The case involved Eurolaser IT, which unsuccessfully appealed against HMRC over a £2.4 million VAT liability. The tribunal upheld that a business may be held accountable for unpaid VAT arising from its supply chain, even if its directors were unaware of the non-compliance. In addition to the outstanding tax, the Berkshire-based company now faces penalties and HMRC’s legal costs.

The ruling emphasised that directors should have known that a consultant, acting independently and without proper oversight, had engaged suppliers implicated in VAT fraud. The absence of due diligence proved decisive in the case.

In the construction sector, HMRC continues to see instances of firms deliberately entering into agreements that falsely categorise payroll companies as providers of ‘construction services’ in order to avoid VAT charges—despite clear evidence to the contrary.

In a separate case, the director of a Sheffield-based payroll firm, Remedy Payroll Solutions Ltd, has been disqualified from acting as a company director for eight years.

The company was placed into liquidation with more than £2.5 million in unpaid VAT, having significantly under-reported its VAT obligations between 2020 and 2021. HMRC investigations revealed that while the company declared a liability of just over £250,000, the actual amount owed was ten times higher.

If you are concerned about your current payroll provider, please contact us on 0800 131 0131 or email sales@rollpay.co.uk.