Government measures to combat illegal work and conduct inspections

The government is taking measures to combat so-called “fraudulent employers” who abuse the immigration system and exploit vulnerable migrants working illegally in the UK. This includes increasing the number of targeted immigration visits to businesses suspected of employing illegal workers, reaching 856 visits in October alone—55% more than in the same month last year. From January to October this year, more than 6,600 visits were conducted, an increase of over 21% compared to last year.

Right-to-work checks must be carried out before hiring to ensure that the individual is legally allowed to perform the job. If done correctly before employment starts, it provides a permanent “statutory excuse” for the duration of the worker’s employment, meaning further checks are only required if their right to work is time-limited and approaching expiration.

Organizations must ensure these checks are performed for all potential employees, including British and Irish citizens, to eliminate the risk of discriminatory treatment and prevent mistakes in verifying work authorization.

Checks can be done manually or digitally. Manual checks involve verifying a document from List A or List B, maintained by the government. A copy of the document must be made and stored throughout the employment period and for two years afterward.

For UK and Irish citizens, digital checks can be conducted using Identity Document Validation Technology (IDVT) through an Identity Service Provider (IDSP) to complete the digital identity verification for those with a valid passport (including Irish passport cards).

For foreign workers, online verification can be done using the Home Office’s Employer Checking Service with a share code provided by the individual whose right to work is being confirmed, along with their date of birth.

Right-to-Work Update

Previously, employers could use paper copies of Biometric Residence Permits (BRP) or Residence Cards (BRC) to verify foreign workers’ right to work. However, this option was removed on April 6, 2022, and replaced with the Employer Checking Service. The Home Office is transitioning to electronic visas instead of BRPs or BRCs, with all current BRPs and BRCs set to expire on December 31, 2024.

This expiration does not affect the right to work of those who presented these documents during the hiring process, as long as the right-to-work check was conducted in compliance with Home Office requirements. Even if the document expires, their right to work remains valid.

However, employers may need to recheck the right to work for some employees who initially provided a physical BRP or BRC. BRPs and BRCs issued from January 2020 onwards expire on December 31, 2024, or earlier, requiring rechecks before expiration. Older BRPs and BRCs issued before January 1, 2020, may have an expiration date beyond December 31, 2024. In such cases, a follow-up right-to-work check must be completed before that date, requiring the employee to create a UKVI account and obtain an e-visa. If employers have doubts, they should consult the Home Office’s Employer Checking Service on GOV.UK.

Government Actions

The government has reaffirmed its commitment to cracking down on illegal work and worker exploitation through penalties such as:

  • Financial penalty notices
  • Business closure orders
  • Potential criminal prosecution

In December 2024, the government released data on illegal work enforcement, highlighting intensified Home Office immigration operations across the UK, focusing on nail salons, supermarkets, the automotive sector, car washes, and construction.

In a statement to the House of Commons on December 2, 2024, Home Secretary Yvette Cooper confirmed that under the Labour government, illegal work visits increased by 34%, and arrests rose by 25% compared to the same period the previous year.

From July 5 to October 31, 2024, authorities conducted 3,188 visits to employers suspected of illegal hiring, leading to 2,299 arrests. By comparison, between July 5 and October 31, 2023, there were 2,371 visits and 1,836 arrests.

The government also announced plans to extend the ban on hiring foreign workers for employers who repeatedly violate visa rules or commit serious employment offenses.

Currently, those who disregard visa regulations face sanctions for up to 12 months. Under new proposals, the repeat offense period will increase to at least two years, with further “cooling-off” periods to be determined.

For employers who violate the rules, new compliance plans will require them to take specific corrective actions, extending enforcement from three to 12 months.

The Home Office has also warned that while these longer-term plans are in effect, non-compliant employers will face restrictions on hiring foreign workers. Failing to comply may result in the revocation of their sponsor license.

Future Plans

These changes will accompany a new Employment Rights Bill, currently under parliamentary review. This bill will establish a Fair Work Agency, merging existing enforcement bodies, including immigration control teams, employment agency regulations, national minimum wage enforcement, statutory sick pay oversight, and licensing schemes for specific industries.

How to enter the UK from April 2025 – New rules for Europe

Starting April 2, 2025, the UK is introducing new entry rules for those who previously traveled without a visa. These changes will affect citizens of Romania, Lithuania, Estonia, Latvia, and other European countries.

From now on, you will need an ETA (Electronic Travel Authorisation) to enter the UK! ✈️

Important Information:

ETA is a mandatory document for tourists, business trips, visiting family or friends, and transit.
Cost: £10 (non-refundable if rejected).
Validity: 2 years or until your passport expires.
Allows multiple entries into the UK.
Application is online only, processing time is around three working days.
Permits stays of up to six months in the UK.
ETA does not guarantee entry – the final decision is made by border control.

Key Dates!

📅 March 5, 2025 – ETA applications open.
📅 April 2, 2025No ETA, no boarding! 🚫

You do NOT need an ETA if you have:

Settled status
Pre-settled status
Work visa
Student visa
Other valid UK visas

Travel Tips for the UK:

✔ Apply for ETA in advance to avoid processing delays.
✔ Make sure your name on the ETA matches your passport exactly.
✔ Check your passport validity before traveling.
✔ Get travel medical insurance.

🚫 With an ETA, you CANNOT:

  • Stay in the UK for more than six months.
  • Work in the UK.
  • Receive social benefits.
  • Get married or apply for marriage registration.
  • Use ETA for continuous stays in the UK by frequently leaving and re-entering.

Stay updated and be prepared!

If you have questions, feel free to ask – we’re happy to help! ✅

Dress Code and Tattoos

Questions and Answers

Q: Should we relax the dress code rules and allow tattoos?

More and more candidates come to interviews with visible tattoos. Technically, this contradicts our dress code, but in today’s world, it no longer seems relevant. Do you think it’s time to relax these rules?

A: Your stance on covering tattoos is your decision; however, you should be able to explain to your staff why you want them to be covered. Your position will likely depend on the type of organization and the nature of the work being done. You may request employees to cover tattoos if you want to present a certain professional environment. Different rules may apply to employees who interact with clients versus those who do not. As long as these rules are applied consistently, this should not be an issue.

Remember, allowing self-expression in the workplace can help build positive relationships with employees and make them feel valued by their employer. Some companies follow this approach—for example, in May 2022, Virgin Atlantic lifted its ban on visible tattoos for uniformed staff to highlight the “individuality of its employees and customers.”

Self-Assessment and January (Penalties)

A critical date in the calendar each year for those working in the field of personal taxation is January 31, when self-assessment tax returns and tax payments must be submitted. Many clients delay sending their documents to agents until the last minute.

However, despite all efforts, some will not be able to submit their returns and required payments on time. What happens next? What other options are available?

Penalties

There are fixed penalties for:

  • Late submission of tax returns,
  • Late payment of tax,
  • Failure to notify initially and for subsequent errors in tax returns.

If the tax return is not submitted by January 31, a £100 penalty is charged. If the return is not submitted within the next three months, a £10 per day penalty is applied for the next 90 days. If the return is six months overdue, an additional penalty of £300 or 5% of the unpaid tax (whichever is greater) is imposed. The same applies again after a 12-month delay.

There are separate penalties for non-payment of tax:

  • After 30 days of non-payment following January 31, a 5% penalty is charged.
  • After six months, another 5% penalty is applied.
  • After 12 months, an additional 5% penalty is imposed.

An important aspect to consider with late payments is that, in addition to penalties, interest will accrue until the debt is paid. The current annual interest rate (as of November 26, 2024) on overdue income tax and capital gains tax is 7.25%.

Once the Making Tax Digital system for income tax is introduced in 2026–2027, a new points-based penalty systemwill apply—similar to what was introduced for VAT in January 2023.

Why Might Your Self-Assessment Tax Return Be Investigated?

Even if you have not made any mistakes in your tax return and have nothing to hide, the prospect of an HMRC investigation can be worrying. So, what triggers an HMRC investigation, and what does HMRC do?

What is an HMRC Tax Investigation?

To ensure that you are paying the correct amount of tax, HMRC can investigate your financial records and tax affairs at any time. HMRC will contact you by letter or phone to explain what they intend to investigate. If your tax returns are prepared by an accountant, HMRC will contact them first (they must inform you immediately).

Besides Self-Assessment tax returns, HMRC also investigates corporation tax returns, employer PAYE records, VAT returns, and other tax matters. HMRC may conduct a full investigation (examining all financial and tax records) or focus on a specific aspect (such as a recent Self-Assessment return). While less common, HMRC also conducts random investigations, meaning any taxpayer or business could be subject to an audit, regardless of their records’ quality.

 

What Triggers an HMRC Investigation?

Your filed tax return is cross-checked with HMRC’s existing data on you or your business. Any significant discrepancies can raise concerns and trigger an investigation. HMRC’s advanced data analysis tools automatically detect unusual patterns.

For example, if your reported business expenses suddenly increase or your turnover drops significantly, reducing your tax liabilities, HMRC may want to investigate the reason. It is important to be careful when filling out your Self-Assessment tax return, as even innocent mistakes can lead to an investigation. Claiming ignorance is unlikely to prevent a penalty.

HMRC investigations are more common in industries where cash-in-hand transactions are frequent. If the income and expenses reported in your tax return do not match industry standards, HMRC may become suspicious. Repeated late filings of Self-Assessment returns can also trigger an investigation, as well as tips from third parties.

 

What Happens If HMRC Starts an Investigation?

HMRC may request a home visit, a meeting at your business premises (if applicable), or at your accountant’s office. Alternatively, you might be asked to visit your nearest tax office (you can bring an accountant or legal advisor).

HMRC can also request third-party information and search premises if necessary. The more serious the issue, the more thorough the investigation. Errors in tax returns may cause HMRC to review previous years’ data, which could lead to additional fines if other issues are found.

You should fully cooperate with HMRC’s investigation. Ignoring notices or refusing a visit will worsen the situation. Once the investigation is complete, HMRC will send you a summary of their findings, and you have the right to appeal if you disagree with the decision.

 

Consequences of an HMRC Investigation

When deciding on a penalty, HMRC considers:

  • The nature of the error,
  • Its impact on your tax obligations,
  • Whether your actions were intentional or unintentional,
  • Your level of cooperation.

The harshest penalties apply to deliberate concealment of income or fraudulent overstatement of expenses to reduce tax liability. Fines can be up to 100% of the unpaid tax, and you will still need to pay the correct tax amount.

If the mistake was honest and minor, the outcome may be more lenient, especially if you voluntarily report it to HMRC. Some investigations result in no additional tax owed, though business owners may still lose time and resources.

 

How to Reduce the Risk of an HMRC Investigation

Use reliable accounting and filing software to prevent errors.
 Take your time when filling out your Self-Assessment tax return—rushing increases the risk of mistakes.
 Ensure all data is accurate and provide all required information.
 Do not claim ineligible expenses—check tax-deductible expenses if you are self-employed.
 Never conceal taxable income or lie about your expenses.
 If your income or expenses significantly change, explain why in your tax return.
 Seek help from a professional accountant to review or prepare your Self-Assessment return to prevent errors.
 Keep receipts and invoices for all business purchases.
 File your Self-Assessment tax return on time—late filings increase the chance of an investigation.

Self-Assessment Tax Return (SATR) Deadline Reminder

Dear Clients,

Under current rules, the annual allowance for tax relief on pensions this tax year is £40,000.

There is also a three year carry forward option for any unused reliefs in those past years, while the lifetime limit for tax relief on total pension contributions is currently £1,073,100 which is due to remain in force until at least April 2026.

You can potentially obtain tax relief on private pension contributions worth up to 100% of your annual earnings subject to the overriding limits quoted above.

Remember, tax relief is paid on pension contributions at the highest rate of Income Tax paid which means that: –

A basic rate taxpayer can save 20% tax

A higher rate taxpayer can save 40% tax

An additional rate taxpayer can save 45% tax

If you are an employee making pension contributions, the first 20% of tax relief is usually automatically applied by your employer with no further action required by you unless you are a higher rate or additional rate taxpayer in which case you can claim back the additional tax relief owed via your Self-Assessment Tax Return.

Self-Assessment Tax Return (SATR) Deadline Reminder

Anyone who is required to submit a SATR for tax year 2021-22 and has not yet done so, please note the deadline of the 31st January is getting closer. Please remember that payment of any tax due should also be made by this date which will include the balance of any payment due for tax year 2021-22 plus the first payment on account due for the current tax year 2022-23.

If you are filing online for the first time you should ensure that you register to use HMRC’s Self-Assessment online service as quickly as possible as it may take up to 10 working days for your activation code to arrive by post and with further potential strike action a possibility, there is no time to lose.

If you miss the filing deadline, you will usually be charged a £100 fixed penalty which applies even if there is no tax to pay or if the tax due is paid on time. Subsequent failure to have submitted a return and paid the tax due by the 1st May 2023 will result in additional penalties of £10 per day up to a maximum of £900, although additional penalties may also be charged if the return and payment due remain outstanding after this.

Last year, of the 12.5 million taxpayers required to complete a Self-Assessment return, more than 2.3 million missed the deadline!

Whether your business structure is a sole trader, partnership or limited company, today’s tax rules have never been more complex and you may find that delegating this potentially stressful and time-consuming task to a professional accountant will prove invaluable and actually save you both time and money, while allowing you to focus all your creative energy on what you do best, generating profits.

Happy New Year!