You Approved It, But Can You Prove It? - The Hidden Liability Inside Third-Party Services

Two of the largest tax bills handed to UK organisations in recent years didn’t come from getting the numbers wrong, they came from getting the classification of contractors wrong. The Department for Work and Pensions was left with a bill of £87.9 million, while the Department for Environment, Food and Rural Affairs settled with HMRC for £86.5 million. Both had used HMRC’s own online tool to assess their contractors, yet both were subsequently found to have made errors in their employment status assessments. 

These were public bodies with established processes and resources, yet both still faced significant liabilities. For private organisations, the lesson goes beyond IR35. Third-party services are commissioned across multiple functions, suppliers and systems, while the decisions behind them can be spread across the business. When something goes wrong, having a process is not enough. You need to be able to show what was bought, why it was approved, how it was managed and what has changed since. 

The Decision Is Only the Beginning 

Every Statement of Work (SOW) based engagement starts with decisions about what is being bought, why it is needed, how the work will be structured, which supplier will deliver it and who has approved it. Those decisions may involve different people and functions, with the information behind them spread across contracts, systems and conversations. 

The challenge is not necessarily that the information does not exist, it’s being able to bring it together and understand the full story of an engagement as it moves from approval into delivery and changes over time. 

When the Engagement Changes 

Third-party service engagements evolve through scopes changes, projects extensions, deliverables added and suppliers may take on new responsibilities. Yet the original approval often remains the reference point while what happens next is managed through emails, calls, spreadsheets and outdated systems. 

A decision that made sense when the engagement started may no longer reflect what is happening months later. Without a clear record of the engagement and how it has changed, it becomes difficult to know when a decision needs to be revisited, who should revisit it or what evidence supports the current position. 

Approval happens once, but the engagement continues to evolve. 

The Question Nobody Wants to Be Asked 

Different stakeholders will view an SOW engagement from different perspectives. Procurement may focus on how it was scoped and approved, Finance on the spend and liability, and the business on whether the work is being delivered as agreed. Ownership can also become unclear as an engagement moves from sourcing into delivery. 

The challenge is maintaining a clear view of the engagement and accountability throughout its lifecycle, particularly when it comes under scrutiny from senior leadership, the board, an auditor or a regulator. 

Can you prove it? 

If answering that means searching through contracts, emails, spreadsheets and outdated systems, having processes in place is not the same as having control. Without a consolidated view of the engagement, its decisions and the evidence behind them, it’s difficult to see what is happening, what has changed and where the risk sits.  

Turning Approval into Accountability 

Managing this risk does not mean adding more approval steps. It means managing the SOW engagement throughout its lifecycle, with the scope, supplier, commercial terms, approvals, decisions and changes kept connected. 

This is where a Services Procurement System (SPS) provides value. It brings the information and decisions around third-party services together in one consolidated view, giving visibility across the full lifecycle of every SOW engagement, from initial scope and approval through to delivery and change. 

With the engagement managed in one place, the organisation has a current view of what has been bought, what has been agreed and what is happening now. When something changes, that change is captured as part of the engagement, making it possible to see how it has evolved over time rather than piecing the story together afterwards.