New tax crackdown on self employed in construction

The government are proposing that all construction workers will be deemed to be employees unless they supply their own materials, provide a substantial amount of plant, or are providing other people’s labour as well as their own.

Plans were announced in the last Budget to tackle the problem of bogus self-employment and a Treasury consultation paper has now been officially launched.HM Revenue & Customs believes up to 400,000 site workers are registered as self-employed when they should be employees, saving both the contractor and the worker thousands of pounds in tax and national insurance contributions.

A Treasury spokesman said: "False self-employment occurs where workers are treated as self-employed for income tax and National Insurance despite the fact that the way in which the work is carried out on a day to day basis demonstrates that there is an employment relationship.

Commenting on the Treasury's announcement Jason Campbell, Chair of the Recruitment and Employment Confederation's Construction Group said: "Many people are correctly working as self employed in construction. Projects are always time limited and skilled tradesmen and construction workers often choose to respond to their changing workplaces by being in business on their own account...However we recognise there are times when construction workers should be employed for tax purposes when they currently are not. We will carefully examine the Treasury's proposals. Any change in status also comes at a cost to the supply chain and it is vital that this is properly understood. Recruitment agencies are in a position to easily supply flexible workers on a PAYE basis, however it is vital that the supply chain meets the cost of this change and that the workers involved understand its implications."