HM Revenue & Customs (HMRC) is doubling its efforts to crack down on tax-evading labour providers, including hospitality businesses.
An extra 100 officers will be brought in to offer free health checks to businesses to help them use legitimate labour providers. Those found guilty of tax evasion could face jail.
David Gauke, exchequer secretary to the treasury said: "This government has invested £900m in HMRC to crack down on people who break the rules. Expanding these teams will help make sure that we bring in the additional money that the UK needs.
"They aim to stop tax losses and increase tax yields by more than half a billion pounds over the next four years. Gangmasters who think they can exploit their staff and the tax system need to think again."
Mike Eland, HMRC director general of enforcement and compliance, said: "We will tackle fraud by those employers who don't play by the rules and the organised crime gangs who exploit their workers.
"We will also work collaboratively with labour users and businesses in these sectors to help them use legitimate providers. This will help to create a level playing field for compliant businesses to compete in the market place."
Labour providers found guilty of tax evasion face custodial sentences, confiscation of their assets and further sanctions such as Financial Reporting Orders and orders banning them from becoming company directors.
The main compliance problems in the sectors are bogus supply chains, repeated liquidations to avoid paying debts, failure to keep business records, VAT registration applications from bogus traders, failure to submit VAT returns, failure to make a return of income and gains and failure to pay National Minimum Wage and operate Statutory Sick Pay.
By Gemma Rowbotham
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