A recent government consultation document has summarised two main ways that criminals target the construction industry supply chain to defraud the government and the industry of millions of pounds:
Additionally, these activities will usually result in underpayment of tax and National Insurance, benefit fraud and illegal working practices, including offences under the Modern Day Slavery act.
HMRC has responded by setting up specialist teams, which visit the larger construction companies and undertake regular reviews of the relationships between them, their contractors and sub-contractors. This can provide a valuable service, particularly when companies aren't aware of frauds being undertaken.
It's essential that all construction companies using labour in their supply chains should undertake due diligence to identify risks and ensure that systems are in place to mitigate fraud of this kind.
If you run a construction company and would like friendly, professional advice about this issue, get in touch – we'll be glad to help.