The case of Opus Labour Services Ltd v HMRC appears to have reinforced HMRC’s tough stance on labour supply chain compliance, upholding a decision that leaves the director of a recruitment agency personally liable for more than £900,000 in tax:
The case [https://www.gov.uk/tax-and-chancery-tribunal-decisions/1-opus-labour-services-limited-in-liquidation-2-jason-giller-v-hmrc-2026-ukut-00275-tcc?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=3af3cedc-7041-4b73-8869-da9e84097666&utm_content=daily] confirmed that the agency should have known its outsourced payroll arrangements were connected to VAT fraud, dismissing its appeal and upholding HMRC’s denial of VAT recovery.
The judgment provides a stark reminder that businesses cannot ignore warning signs in their supply chains and illustrates how HMRC is prepared to apply the Kittel principle where it believes businesses should have identified fraudulent arrangements.
“This decision should serve as a warning to every business operating in the labour supply chain,” warned Crawford Temple, CEO of Professional Passport. “While this is a VAT case and sits outside the scope of the new Joint and Several Liability legislation, it demonstrates HMRC’s willingness to pursue tax losses wherever they arise and, where appropriate, hold directors personally accountable where they conclude they should have known that something was wrong.
“Taken alongside Joint and Several Liability, it paints a clear picture of HMRC’s direction of travel. Businesses can no longer assume that responsibility ends with the umbrella company. Whether the issue is unpaid PAYE under JSL or a VAT shortfall, HMRC is increasingly looking beyond the immediate defaulting business to those who facilitated or benefited from the arrangements.”
Crawford says the message from the tribunal is simple: “Turning a blind eye is no defence,” he says. “Directors and businesses are expected to understand their supply chains, question arrangements that do not stand up to commercial scrutiny and take meaningful steps to identify and address risk. The cost of failing to do so can be significant, with financial liabilities extending beyond the company and, in some cases, like in the case of Opus, to the individuals responsible for its decisions.”
