Government scrutiny of external worker arrangements is at an all-time high. The immediate driver is tax. HMRC is working harder than ever to recover unpaid tax and National Insurance from across the supply chain, and the tools available to do so are getting ever sharper.
But compliance is only part of the story. Businesses that properly understand how their external workforce is engaged consistently find commercial benefits they weren’t expecting. Better rate control. Cleaner supplier relationships. Fewer invoice disputes. A more accurate picture of what external labour is actually costing them. The government scrutiny is the prompt. The upside is bigger than avoiding a fine.
So why aren’t more businesses looking?
Usually because they don’t know where to start. Worker data sits across different systems, processes are fragmented and without true ownership and until now, no one has really been pushing to know more. The curtain has stayed closed.
These five questions are a good place to start pulling it back.
1. Do you know what you are actually buying?
The invoices are landing in accounts payable. But do they reflect what was actually agreed? Are rates consistent across the business? Is the same work being charged differently in different parts of the organisation? In most businesses, Finance can tell you what was approved. What’s harder to answer is whether that spend represents value and whether anyone is in a position to challenge it if it doesn’t.
2. Do you know how many suppliers you are using?
There is usually a list. There is rarely an accurate one. The approved supplier list and the list of suppliers who actually raised invoices in the last twelve months are frequently very different documents. Local relationships, legacy arrangements and managers making their own calls mean the real number is almost always higher than expected and some of those suppliers have never been properly vetted.
3. Do you know whether any of your workers are engaged through umbrella companies?
Most businesses don’t. Umbrella arrangements tend to be invisible at the client level. They sit between the agency and the worker. But they carry real risk, and with umbrella reform underway and joint and several liability in play, it is worth understanding your exposure.
4. Do you know whether your worker classification decisions are documented?
IR35 has been on the agenda for years. Most businesses have had the conversation. Far fewer have documented decisions for each engagement that would stand up to scrutiny. If HMRC came asking, the question isn’t whether you thought about it. It’s whether you can demonstrate that reasonable care was taken.
5. Do you know how long your external workers have been working with you?
In businesses that have scaled quickly, it is not uncommon to find contractors or agency workers who have been continuously engaged for two, three, sometimes five or more years. Long tenure creates disguised employment risk and it almost never surfaces from the Finance function without someone going looking for it.
If you can answer all five confidently, your external workforce is in better shape than most.
Written by:
Founder
I’m an art school graduate who ended up running a record label in Lisbon before finding my way into PMO. Not the most obvious path — but looking back, the thread is obvious. I’ve always been drawn to complex, moving-parts problems, and I’ve always wanted to work differently.
That second part matters. Extended workforce is about people choosing how they work. I found my way to this space because I wanted that freedom myself — and now I’m here to help make it work better for everyone in the ecosystem.
I founded RedWizard in 2014 when I realised how fragmented extended workforce management actually is — and the impact that has on both individual and collective effectiveness. Coming from a PMO background, I saw that fragmentation differently to most. Where others accepted it, I saw a missed opportunity. My early work focused on proving that — building a cross-functional Centre of Excellence on a global programme that brought client teams and strategic partners together around the same table. When people with different perspectives start sharing stories and challenges openly, the opportunity becomes obvious.
I’m at my best working with mid-sized organisations where I can genuinely feel the difference we make.