HMRC Cracks Down on Tax Compliance in the Security Sector

HMRC, in collaboration with the Security Industry Authority (SIA) and the Department for Work and Pensions (DWP), has begun a full-scale compliance drive targeting the misuse of self-employment and non-compliant payroll schemes across the sector.

In April 2025, more than 18,000 security businesses and agents – including 12,500 providers and 6,000 intermediaries – were formally warned by HMRC that current self-employment and subcontracting practices were not compatible with UK tax law. A four-month grace period followed. That grace period is now over – and enforcement has begun.

Using Real Time Information (RTI) data, HMRC will now identify and penalise firms that have not transitioned their workforce to PAYE-compliant models. Businesses that continue to rely on misclassification, offshore schemes, or disguised remuneration through third-party payroll providers will face severe consequences.

Importantly, companies that use payroll provider schemes to circumvent tax obligations – breaking down wages through expenses, deductions, or allowances to reduce liabilities – are not tax compliant, according to HMRC. These models are now under intensified scrutiny, and their continued use may trigger retrospective enforcement.

The crackdown comes as part of a broader industry and government ambition to raise professional standards, end exploitation, and ensure public safety – particularly within the night-time and events economies, where the role of door supervisors and security personnel is critical.

This effort also aligns with the Government’s wider agenda, including the drive toward business licensing in the security sector and the introduction of Martyn’s Law, which places new legal duties on venues and organisers to enhance counter-terrorism preparedness.

The Government’s message is clear: a professional, compliant, and transparent security industry is a national priority.

For too long, non-compliant firms have undercut legitimate operators through disguised self-employment, offshore payrolls, and opaque subcontracting chains – exploiting workers and creating legal exposure for buyers. These practices have undermined fair competition, eroded trust, and left security operatives without proper employment protections or insurance.

Now, HMRC is also making clear that liability extends to buyers. Under the Employment Agencies Act 1973, venue operators, event promoters, and businesses that fail to carry out due diligence on their security suppliers may be held financially and legally responsible if non-compliance is found. In short: if your provider is breaking the rules, you could be too.

Michael Kill, Chair of the UK Door Security Association and CEO of the Night Time Industries Association (NTIA), commented:
“This is a pivotal moment for the industry. The enforcement action being implemented by HMRC goes beyond tax compliance – it signals a broader move to restore trust and integrity in a sector that plays a critical role in public safety.”

We are calling time on disguised employment, sham payroll schemes, and the exploitation of workers. The entire supply chain — from buyers and contractors to agencies — must raise standards and take responsibility.”

With business licensing potentially on the horizon and the Government signalling its intention to invest in this area, the opportunity to professionalise the sector and move it forward has never been clearer. Combined with the imminent introduction of Martyn’s Law, this marks the beginning of a new era — one that demands accountability, transparency, and leadership from within.”

Satia Rai, CEO of the International Professional Security Association (IPSA) and Non Executive Board Member of the Night Time Industries Association (NTIA), commented:
“This is a defining moment for our industry. IPSA fully supports HMRC’s enforcement against non-compliant employment practices that have exploited frontline security officers and undermined our profession for far too long.”

“The security sector plays a critical role in public safety. It must be built on fairness, integrity, and respect – not sham contracts or payroll abuse.”

“The industry is united. We are drawing a clear line: no more disguised self-employment, no more dodging responsibilities. The road ahead demands transparency, accountability, and leadership”.

Anne Marie Chebib, Chair of the UK Crowd Management Association (UKCMA), commented:
“For too many years, we have seen companies working to evade their duties as responsible employers, and now is the time to even the playing field. A critical part of this picture is operating under HMRC’s Pay As You Earn (PAYE) schemes and supporting fair wages for all employees across our supply chains.”

“Acting as a united body with enforcement colleagues will support legitimate businesses, and improve public confidence in our industry. The enforcement against businesses who are not acting legitimately is paramount.”