HMRC’s approach to tax compliance enquiries is shifting.
While multi-tax enquiries are not new, the scale of cross-department collaboration and the depth of pre-enquiry intelligence gathering represent a decisive change.
What was a simple tax check is now an end-to-end assessment of a business’s operational controls, governance, workforce practices, and its supply chain.
This is highly indicative of how the new Fair Work Agency (FWA), launching in April 2026, will operate.
The FWA will consolidate enforcement of key employment rights – National Minimum Wage, holiday pay, agency worker protections, labour exploitation safeguards and licensing rules – under one body. Its model will drive compliance through joined-up intelligence, risk-based targeting, and proactive enforcement.
Supply chain scrutiny
One of the most significant shifts is HMRC’s widened focus beyond a business’s own practices to include those it pays and those who pay it.
Businesses are being asked to evidence how suppliers are selected, onboarded, monitored and vetted, including controls around prevention of labour exploitation and modern slavery.
The message is clear: tax risk, employment rights risk and supply-chain risk are now inseparable.
Co-operation with compliant businesses
Joint and several liability provisions—across PAYE, VAT, and labour market enforcement—are becoming central to HMRC’s strategy.
Notably, HMRC is more frequently seeking cooperation from compliant businesses to help identify non-compliant operators.
The FWA is expected to take a similar stance. With powers to issue penalties, recover underpayments, and enforce labour-market undertakings, it will rely heavily on businesses demonstrating robust due diligence and transparent workforce practices.
What does this mean for your business?
This places new expectations on all businesses regardless of sector and a greater importance on taking the time to assess your governance, due diligence and workforce controls and ensure they are documented and regularly reviewed.
Actions to take include mapping out your supply chains end-to-end and assessing due diligence.
This must be meaningful, evidenced and ongoing, not box-ticking. You’ll need to review and update suppliers’ contracts and onboarding where needed, as well as conducting an audit of NMW, holiday and SSP calculations.
Those who are prepared can navigate enquiries far more effectively and often reduce liabilities significantly.
Those who are not may find themselves inheriting the failings of others – whether tax-related or labour rights-related.
