Are you a self-employed contractor? Do you frequently get work through the services of an agency? If the answer to either of these questions is yes, then you should be aware that HM Revenues and Customs is stepping up its tax crackdown on construction workers. Over the course of the previous financial year HMRC increased tax revenues in the sector by almost 55 per cent, from £78.9 million to £122 million. The latest advice comes as HMRC looks to step up the intensity of its campaign by targeting the practices of what it calls ineligible tax schemes. It is advising anyone involved in the sector to speak to their accountants and get an expert independent review of the current working arrangements.
So what lies behind HMRC’s concerns? Well, the nature of the sector has inevitably meant that the construction industry has always had a large number of self-employed contractors. In fact, HMRC’s figures suggest that the sector currently employs around 200,000 construction workers registered as self-employed through outsourced agencies. The size of this can only be fully appreciated when you consider that there are only approximately 50,000 self-employed contractors in all other sectors combined.
The problems have been compounded because HMRC believes a number of contractors are using tax schemes for which they are ineligible. Are these concerns justified? Well, according to contractor financial services form, Outsauce, they may just be. How can contractors find out whether they are breaking any of HMRC‘s rules regarding eligibility? Well, Miles Lloyd, CEO of Outsauce, believes a simple audit check by accountants will identify whether individuals are using the best scheme available for their professional circumstances, and fully complying with tax legislation. An independent audit check by an accountant will be able to identify whether construction contractors are using the optimum model because it focuses on personal circumstances, compliance and take home pay:
“With a large number of construction workers operating on a self-employed basis, many individuals – particularly those who have operated alone for a number of years – are using schemes that they simply aren’t eligible for,” he said.
“Given that HMRC is using construction as a target sector for onshore legislation, the risk of contractors being pursued in retrospective HMRC investigations has never been higher so contractors should act now to protect themselves.”
“I would encourage contractors to ensure the review is conducted by an impartial service provider offering all three HMRC recognised models: self-employed/CIS, employed/umbrella and PSC/Limited Company. This way they will know that all options have been carefully considered when a recommendation is made,” he added.
Do you work in the construction sector? Are you confused by the tax and insurance changes introduced by HMRC in April this year? Then why don’t you speak to the accountants at Steven Glicher? Call Steven Glicher accountants today for expert help and the very best tax advice on 0161 485 8007 or email info@