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| CURRENT SECTION :: IR35 / IR591 | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Representatives of the large Construction Companies have asked the Government to consider redefining certain self employed construction workers as employees for tax purposes so that they are subject to both income tax through PAYE and Class 1 National Insurance Contributions. The Paymaster General has asked the Inland Revenue to discuss with the Industry the feasibility of their proposal with a view to reporting back before the Pre Budget Report in November 2004. DETAILS 1. The Government announced in the Pre Budget Report that it was determined to tackle non-compliance in the Construction Industry by those contractors who routinely ignore their responsibilities to check whether workers are self-employed or employed and account for tax and National Insurance on the correct basis. As a consequence the Inland Revenue is stepping up its compliance activities in this sector to ensure that everyone understands and meets their tax obligations on whether a worker should be taxed as an employee or not. It also announced that the financial consequences for those that are found ignoring the correct status would increase. 2. Industry representatives have supported the compliance drive but have asked the Government for further measures to create the certainty they require and a level playing field to compete fairly for contracts with those who routinely use falsely self-employed labour. In particular, they would like the Government to consider a wider reform to make labour-only sub-contractors subject to the same tax and National Insurance provisions as the employed. 3. The Inland Revenue will therefore be discussing with the industry the feasibility of the proposal and whether such an approach could open up further flexibility in the reformed Construction Industry Scheme. We wonder how long it will be before the Revenue turn their sights, yet again, to the IT contractor. There was mention in the Budget that the Government were going: "to consider the issues raised by the interaction with the tax system of definitions of income of self-employment, and the remuneration paid to owner-managers, in a discussion paper which will be issued at the time of the 2004 Pre-Budget Report." Mar 24, 2004 Email this article Printer friendly page Previous Page
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