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More than £2 million in VAT payments are due to be paid to the Exchequer from gangmaster businesses, thanks to the Gangmasters Licensing Authority (GLA).

The money was identified during the first year of GLA operations (April 2006 - March 2007) and with a further 289 licence applications since this period the total of VAT payments is likely to increase.

The GLA requires that all gangmasters who operate in the agriculture, shellfish gathering and food processing and packaging sectors are licensed in order to protect vulnerable workers from exploitation. As part of that process, as with all businesses, gangmasters must ensure they follow VAT registration rules.

The GLA in conjunction with HMRC have revealed that at least 40 businesses who applied for a GLA licence had not previously been registered with HMRC.

The VAT payments demonstrate that an agency set up to protect exploited workers can also benefit the UK economy.

Paul Whitehouse, Chairman of the GLA said:

"I am very pleased to see the quantifiable benefits that have been achieved due to the close partnership between the GLA and HMRC. It is fantastic to see that the public no longer have to subsidise the non-payment of tax by these gangmasters. Assisting the recovery of UK taxes is an important role of the GLA. The £2 million recovered goes to show that the GLA can benefit the UK economy. Gangmasters who avoid paying taxes may often break the law in other areas. We will continue to take this very seriously as part of the fight to end worker exploitation."

The calculation was based on the companies' turnover in the GLA regulated sectors alone which was provided as part of the licence application process. These figures were adjusted to take into account the input tax that the businesses may be able to reclaim. The GLA expect a potential net income of £2,075,000 will be received by UK government from gangmaster licensing in VAT payments alone, working out at an average £51,887 per gangmaster.

In addition to the VAT, these businesses declared that they supplied 6,193 workers which may have led to an increase in national insurance payments and individual tax payments by the workers, as well as the corporation tax that the companies would be liable to pay themselves.

Andy Armitt, Deputy Director, HMRC Labour Provider Unit said:

"The work of the GLA in partnership with HMRC is now producing real benefits. The identification by the GLA of businesses trading in the licensed sector has greatly assisted HMRC in ensuring compliance with taxation obligations and in protecting the rights of workers."

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HMRC: Gangmasters to pay more than £2m to UK Government thanks to the GLA