Worker Status

10th December 2013

2013 Autumn Statement: HMRC attack construction worker status, AGAIN!
Construction is a trade which continually has issues with worker status. The building main contractor wants the flexibility of hiring labour only sub-contractors as and when required, but it does not want the rights and costs that come with employment. A present day workaround to this conundrum has been to hire workers through a specialist employment agency, that has bespoke contracts and procedures in place to demonstrate that the workers are self-employed. Unsurprisingly, HMRC lose out in such an arrangement, as self-employed workers pay less income tax and national insurance than employees. In addition, the tax and NIC that is collected is paid over later, is more difficult to administer and is often under declared. So in his 2013 Autumn Statement, the Chancellor George Osbourne announced new tax anti-avoidance measures:

If enacted into legislation in their current form, these will take effect from 6 April 2014.

As the status of false self-employed workers will change to employees the onshore employment intermediaries will have to pay Class 1 employer NICs. This may well be enough of a change to make it no longer cost effective for building contractors to use such agencies. It will be interesting to see how the specialist contract lawyers at these agencies try to exempt themselves from this new legislation.

The Government are predicting that this new measure will affect around 250,000 workers, bringing in £520m extra tax in the first year. So contractors and subbies beware, there’s a change in the wind.



 
Other items in Blogs
 
Lucy Bayliss
8th January 2020 It’s the final countdown!

There are only 23 days until the self-assessment tax return deadline of 31 January 2020. If your return is not filed electronically by this date, an automatic £100 penalty will be applied. Please note that the deadline for filing a paper tax return was 31 October 2019 and therefore all returns are required to be…

Read More »

Vanessa Pearson
13th December 2019 April 2020 Proposed IR35 changes: Status appeals process

As the planned changes to who determines IR35 status are fast approaching, contractors would be well advised to review their contracts on HMRC’s updated CEST (Check Employment Status for Tax) tool. Having provided answers to questions regarding substitution, control and nature of the work, the updated tool will give HMRC’s view of the workers employment…

Read More »

Ben Kilby
12th December 2019 VAT Surcharge

Have you or your business received one between 23 April 2018 and 31 January 2019?   If so, you may want to check if it has been dated. If it has not been dated you may be in for a refund. Any surcharge liability notice or surcharge liability notice extensions are invalid if they have…

Read More »

Lucy Bayliss
25th November 2019 Don’t let your tax bill affect your festive joy. Instead, spread your tax payments throughout the year!

With the festive period fast approaching, it is easy to lose sight of your self-assessment tax return!   If you are employed or receiving a pension and you file your return before 30 December 2019, you can elect to have your tax collected through ‘Pay As You Earn’ (PAYE) rather than paying one lump sum…

Read More »

Ian Piper
22nd November 2019 2019 Growth: Missing in action?

(Data Source) As another year draws to a close, local SME businesses will be forgiven for looking forward to drawing a line under it. With 2019 sales growth barely nudging 1%, it has been a year of focusing on not slipping backwards, rather than the usual mantra of continually signing up new accounts.  When commentators…

Read More »

Mark Burrows
21st November 2019 Avoiding Self Assessment Tax Scams

HM Revenue & Customs have reminded Self Assessment taxpayers to watch out for fraudsters as the tax return filing deadline of 31 January approaches.   HMRC say they have received nearly 900,000 reports of suspicious phone calls, texts or e-mails from scammers pretending to be the tax authority.  Most of these messages were about fake…

Read More »