HMRC is sending out letters to security firms, urging them to check whether their operatives should be classed as employed for tax purposes. Find out what action you need to take before the 7 August 2025 deadline.
A client of ours recently brought to our attention a letter they received from HMRC earlier this year. The letter began with a clear message:
“Please check you’re taxing your security workers correctly.”
We’re sharing this update as we’re aware that many of our clients operate in the security sector. Whether or not you’ve received a letter yet, this information is relevant, and taking early action is key.
Why HMRC Is Getting Involved
HMRC has written to private security firms and other organisations that provide or use contracted security services. They’ve raised concerns about criminals infiltrating the sector through fraudulent supply chains. Companies that appear legitimate but withhold tax and National Insurance (NI)deductions from workers’ pay, keeping the money for themselves.
The letter makes it clear:
“You need to ensure that the right tax and NIC are being deducted and paid to HMRC. This will mean criminals can’t profit at your expense.”
What You Need to Do by 7 August 2025
HMRC expects most security workers to be employed for tax purposes, meaning they should be on payroll, with tax and NI deducted at source.
If you’re engaging self-employed operatives, you must check their employment status using the CEST tool. If the outcome is that a worker is classed as employed for tax purposes, then:
- They must be paid through PAYE.
- You, as the engaging company, are responsible for operating PAYE and paying National Insurance.
If another party provides you with security workers (e.g., an agency or subcontractor), you must be clear on who is responsible for PAYE. Don’t assume it’s someone else; if HMRC finds an issue, the liability may fall on you.
The Risks of Getting It Wrong
Failing to assess or apply the correct employment status could lead to:
- Backdated tax bills
- HMRC penalties
- Increased scrutiny of your business practices
Put simply, if you’re contracting security operatives, you need to be confident that tax and NI are being handled correctly.
Need Help?
We know this can be a grey area, and that many security firms operate with complex contractor relationships. If you’re unsure whether your current set-up is compliant, or if you’ve received a letter and don’t know where to start, get in touch with us. We’re here to support you.
Read the full HMRC guidance here: How HMRC Rules Apply to Security Operatives You Deploy
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