If your security company operates in the UK and relies on subcontracted personnel, HMRC’s latest campaign could impact you. The tax authority has issued compliance warnings to thousands of firms—especially those using subcontractors—to address employment status issues and tax mismanagement.
This guide breaks down what’s happening, who’s affected, and what your firm must do before 3 August 2025 to stay on the right side of the law.
🚨 Why HMRC Is Focused on the Security Sector
The security industry is under scrutiny for:
Incorrect employment classification: Many workers are labelled as self-employed when they operate like employees.
Fraudulent supply chains: Some intermediaries withhold PAYE and NICs but never pass them to HMRC.
Tax underpayments: Misclassification leads to lost Income Tax and NICs, hurting public revenue.
👥 Who’s Affected?
Security firms using subcontractors or third-party labour.
Agencies that supply security personnel.
Subcontractors working without formal employment assessments.
✅ What HMRC Expects You to Do by 3 August 2025
Verify PAYE Registration Subcontracted security workers who are under your control likely count as employees. Make sure PAYE and NICs are properly handled.
Ensure Full Tax Deductions Are Made Whether you pay operatives directly or through a third party, all taxes must be accounted for correctly under UK law.
Review Your Labour Supply Chain If an agency or umbrella company is involved, confirm they are fulfilling their PAYE responsibilities. You could be held liable if they aren’t.
🧠 Are Your Subcontractors Truly Self-Employed?
Use HMRC’s Check Employment Status for Tax (CEST) tool to assess:
Who controls the work?
Who supplies tools and uniforms?
Can the worker send a substitute?
Does the worker bear financial risk?
If the tool determines they’re an employee, you must operate PAYE—regardless of how they’re paid.
⚠️ Risks of Non-Compliance
Failing to meet HMRC’s requirements may result in:
Unpaid tax bills
Financial penalties and interest
Damage to your firm’s reputation
Criminal charges in serious fraud cases
🛠️ Compliance Checklist
✅ Conduct regular employment status checks
✅ Save CEST results as evidence
✅ Verify tax compliance of agencies and intermediaries
✅ Keep detailed digital records
✅ Have Southern Payroll Solutions take the load off!
Contact Southern Payroll Solutions today to ensure you are getting your compliance right and to help you avoid steep penalties later. Take action before the 3 August 2025 deadline!
Directors of a Hampshire based payroll bureau offering managed payroll services and ad-hoc consultancy. Niall and Rebecca have nearly two decades of payroll experience to draw upon, and are keen toā¦
