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 HMRC is stepping up its tax crackdown on construction workers. Our advice is to consult your accountant at the earliest available opportunity if you want to ensure you do not fall foul of the proposed changes.
The targeting of construction workers is not news in itself.
Steven Glicher and other firms of accountants have been aware that HMRC has been targeting this sector over recent years. What has changed, however, is the intensity of this campaign. This ongoing crackdown on construction contractor cases has already resulted in increased revenue. According to HMRC’s figures revenue in 2013 increased significantly on 2012 because of this new policy. NoPalaver, an accounting services group, believe the revenue has increased by as much as 55 per cent. Its figures suggest that HMRC took £78.9 million from construction industry investigations in 2011-12; rising to £122 million in 2012-13.
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 aim of HMRC’s latest drive is to increase outstanding tax revenue collection and to force businesses and contractors to prove that they have considered their employment situations fully. However, according to Graham Jenner, director of NoPalaver, this is not easily-achievable as “the construction industry is not always exemplary in keeping administrative records.”
So what is HMRC hoping to achieve?
Well, under new proposals due to take effect from 6th April 2014, agencies hiring the contractor to the company – which were previously responsible for paying employment taxes and National Insurance contributions (NICs) – will no longer be affected, with the responsibility soon to be on the company; the end user of their services. According to Mr Jenner:
“This makes it more important than ever for construction companies, employment agencies and construction sector contractors to make sure that their tax arrangements are fully compliant with the new legislation.”
“Failure to do so could result in massive tax bills, and loss of vital flexibility in employment.”
If you’re a self-employed contractor or subcontractor and need to speak to someone about your accountancy and tax requirements, call Steve Glicher accountants on 0161 485 8007 for friendly help and the very best advice.