Businesses must pay for digital ID checking from April

Businesses will have to license software to onboard employees remotely from April as Home Office outsources digital ID checking

Businesses face having to pay up to £70 per employee to verify a new starter’s identity from April as the Government privatises digital ID checking.

In a surprise move, the Home Office says that from April 6 businesses will have to use approved third-party software to verify digital identity.

Louisa Cole, a principal associate at Eversheds Sutherland, told The Times that, based on their research, these ID checks were likely to cost anywhere between £1.50 to £70 per prospective employee.

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“It is a big change for employers because the cost is on them to purchase this technology and to put it in place. For large employers if they are onboarding large numbers of people it’s going to add a huge cost to their budget,” she said.

This would work in much the same way as businessees have to license approved software to file their VAT returns through HMRC’s Making Tax Digital system. Many small businesses have questioned how exactly MTD helps their business apart from adding to their administrative burden plus costs.

Before Covid-19, small businesses onboarding new recruits carried out physical checks of passports and visual verification of individuals. The rules were changed on March 30, 2020 as remote working began to allow for virtual checks, with new employees simply holding up their passports to their home computer screen.

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The ID-checking software providers have not been approved yet, despite the new scheme going live in less than three months’ time.

But employers can be fined up to £20,000 per new employee if they knowingly hire illegal workers using fake or borrowed ID that could have been picked up if the business had made Government-stipulated checks.

The Association of Professional Staffing Companies (APSCo) has called on the Home Office to clarify standardised rates or fee caps to prevent small business recruiters from being hit in the pocket.

Tania Bowers, global public policy director at APSCo, said: “We are concerned that SME staffing firms will be exposed to high fees given that the decision around certified provider usages is often driven by the end-user’s outsourcing provider. This is an additional cost of supply, leading to higher costs for end-users or lower rates for workers, disincentivising the best talent to apply for positions.

“We have asked that the Home Office introduce low standard rates or caps on fees and other suitable limitations on the Identification Document Validation Technology certified providers to prevent staffing firms being unnecessarily financially impacted.”

Ms Bowers said there was also the potential for unnecessary duplication of checks.

Further reading

Help to Grow: Digital – how can it help my business?

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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