Post 2: HMRC Investigations – Why One Small Mistake Can Open Every Door

When HMRC finds an irregularity in labour payments or status checks, it rarely stops there.

How it starts

It might begin with something minor. A sole trader’s tax return doesn’t match your records, or a missing verification raises a flag. Once that happens, HMRC may request information on every individual you’ve paid.

What happens next

They may review contracts, invoices and working arrangements to decide whether those sole traders were genuinely self-employed. They can also contact workers directly to confirm how the relationship operated day to day.

If HMRC believes control or dependency exists, it can reclassify those workers as employees and issue a compliance notice.

The knock-on effect

An investigation can quickly expand to include PAYE, VAT, Pensions Auto-Enrolment or even directors’ personal tax affairs. In some cases, businesses have also lost CIS Gross Payment Status, which can damage cash flow.

How to reduce your exposure

When workers are engaged through NRP, all verification and compliance checks are handled under a CIS structure managed by NRP.
We ensure accurate submissions, provide a complete audit trail, and maintain transparent records that satisfy HMRC scrutiny.

Your workers stay self-employed, your projects continue without disruption, and your business remains fully compliant.

CASE STUDY – False Self-Employment in the construction industry

Next up – Post 3: Employment Law Exposure – When Self-Employed Workers Start to Look Like Employees

Contact Steve McDermott if you would you like to know a little more about the risk and benefit of outsourcing you contractor payroll, and have No-obligation chat:

steve.mcdermott@newredplanet.com or 07854 881 220 or 0161 713 1730