Hidden Risks in Your Supply Chain: What Every Business Needs to Know
In an increasingly complex contractor landscape, many businesses are unknowingly exposed to hidden compliance risks buried deep within their contingent labour supply chains. The introduction of the Off-Payroll (IR35) legislation has not only shifted responsibility for compliance but has also intensified the expectations on Fee Payers and end clients to ensure their supply chain is watertight.
While IR35 status assessments often take centre stage, they’re only part of the picture. The real exposure lies in what happens after that assessment — in how payments flow, contracts are managed, and compliance is evidenced.
Here are some of the key hidden risks businesses should be aware of:
Inconsistent or Unverified Status Determinations
Even where assessments are carried out, many organisations fail to maintain robust audit trails or rely on unchecked third-party processes. If HMRC reviews your supply chain, you’ll need to evidence not only that “reasonable care” was taken, but that every engagement has been correctly assessed and managed through a compliant workflow.
Commercial risk: Incorrect or poorly documented determinations can lead to retrospective tax liabilities, penalties, and reputational damage — particularly in high-value projects.
Unregulated Intermediaries and Umbrella Companies
Non-compliant intermediaries remain a major vulnerability. From tax avoidance schemes to disguised remuneration models, even a single rogue supplier can compromise your entire supply chain integrity.
Commercial risk: Financial penalties, contractor disputes, and the reputational fallout from association with non-compliant schemes.
Contractual Disconnects Between Commercial and Legal Terms
In many firms, procurement and project teams drive contingent hiring at pace — often without contracts aligned to IR35 realities. Without legally watertight terms reflecting working practices, your compliance position is weakened before work even begins.
Commercial risk: Misalignment between day-to-day control and contractual intent creates exposure during audits and disputes.
Lack of Ongoing Monitoring
Compliance isn’t a one-off exercise. Contractor working practices evolve over project lifecycles, and without regular reviews or re-assessments, a once-compliant engagement can quietly drift into risk.
Commercial risk: “Set and forget” compliance leads to creeping exposure — particularly on long-term contracts.
A Strategic Solution: Visibility, Control, and Assurance
To mitigate these risks, leading businesses are taking a more strategic approach — partnering with specialists who bring together legal expertise, compliance technology, and transparent processes.
Brookson Legal’s Fee Payer Solution gives you:
- End-to-end management of the IR35 process — from assessments to accurate payroll.
- Legal assurance on every determination, backed by regulated advice.
- Complete supply chain visibility, ensuring each party meets its obligations.
- Peace of mind that your contingent workforce is compliant, commercial, and future-ready.
The Bottom Line:
IR35 isn’t just a tax challenge — it’s a supply chain integrity challenge. Understanding and managing the hidden risks within your contingent labour network is essential to protecting your projects, your reputation, and your bottom line.
If you’d like to benchmark your current processes or review where hidden risks may lie, our team can help.