CIS Scheme Changes

[CliveP]

Hi all,

Has anyone heard about the imminent changes to the Construction Industry Scheme? If the rumours are correct, come next tax year Hector will have his wicked way and all those self employed 'subbies' out there will be re-classified as 'employees' under the new legislation.

I have a couple of friends that work in the industry and according to them, the sh1t will royally be hitting the fan when the changes are fully introduced. I'm not sure to what extent Umbrella and small Ltd Companies will be affected but I thought I'd give you a heads up.

Interesting times ahead no doubt...

Clive

[CrazyMoose]

interested stuff. I've had a sniff around google and it looks like it will happen next year. Surely this is bad timing given the already dire state of the Construction Industry at the moment? Still, £350m a year towards the government coffers is not to be overlooked. Is it?

[The SMG]

HMRC have been targeting the Construction Industry for years, didn't they change the CIS only last year? This new angle of attack is quite interesting though, I wonder if it will lead to a rise in black market trade lower down the chain?

[Pistachio]

Originally Posted by CliveP

Hi all,

Has anyone heard about the imminent changes to the Construction Industry Scheme?

No. Never even heard of it.

Should I know about it?

[Malvolio]

Originally Posted by Pistachio

No. Never even heard of it.

Should I know about it?

Well yes, actually. It's about having differntial tax regimes depending on employment status, such status to be determined by criteria over which you have little control (and knowing most builders, not a lot of knowledge). Sound familiar?

It's limited to a given trade, but if they make the rules stick, there's no reason not to extend them elsewhere...

[Howzat]

Originally Posted by Malvolio

Well yes, actually. It's about having differntial tax regimes depending on employment status, such status to be determined by criteria over which you have little control (and knowing most builders, not a lot of knowledge). Sound familiar?

It's limited to a given trade, but if they make the rules stick, there's no reason not to extend them elsewhere...

I concur. This is also quite relevant...

"It would appear that the real reason for this reform is not to crack down on false self-employment but to undermine what is genuine self-employment as the HMRC has discovered in its many futile challenges. It is simply that in reclassifying more workers, the Treasury will be able to generate more revenue. This is not just a tax on jobs, but an unfair levy on a single, vulnerable industry.”

H

[Beefy198]

Not so long ago my cousin was telling me about her work setup.

She's a hairdresser and works every single working day at the same salon. She 'rents' the chair and has to 'purchase' any products she uses from that salon. She's not employed by them, the owner has an accountant to work out her pay and fees are deducted for this. She has to fill out her own self-assessment for tax.

If she wants a day off she has to clear it with the owner, despite technically being her own boss. When she has time off, she isn't paid for holiday.

Her contract pretty much states that she will be sued if she takes on any of the salon clients privately.

If that isn't disguised employment, I don't know what is. And she says pretty much every hairdresser has to operate in this way, it's just standard industry practice.

But of course, the government only want to target those that they believe they can get more tax revenue from, not the workers who are actually screwed out of their rights.

[uptonaccountants.com]

Yep, there are others as well....gym instructors and some taxi drivers amongst others.

As Mal says, if this sticks then they'll roll it out. Bearing in mind the type of people they're targeting, there is potential for a lot of tax revenue from builders.

[hugo@gabem]

What HMRC might deem false self employment is all over the place but the single largest market is construction, if you apply it there, it's instant revenue.

The document we've been following is a consultation called "False self-employment in construction: taxation of workers"

What it says is that there are people working self employed in the construction sector who should be classified as employed; it says that the current tests for self employment are vague and recommends new legally binding rules to determine what they call “deemed employment”. The idea of course is to force employed levels of tax and NI on the self employed community but without giving them the rights of employed workers.

Needless to say this will increase the cost of construction for contractors and the end clients right at a time when they can least afford it. So it remains to be seen whether this can be implemented now, held off or dropped altogether.

[Howzat]

Originally Posted by hugo@gabem

What HMRC might deem false self employment is all over the place but the single largest market is construction, if you apply it there, it's instant revenue.

The document we've been following is a consultation called "False self-employment in construction: taxation of workers"

What it says is that there are people working self employed in the construction sector who should be classified as employed; it says that the current tests for self employment are vague and recommends new legally binding rules to determine what they call “deemed employment”. The idea of course is to force employed levels of tax and NI on the self employed community but without giving them the rights of employed workers.

Needless to say this will increase the cost of construction for contractors and the end clients right at a time when they can least afford it. So it remains to be seen whether this can be implemented now, held off or dropped altogether.

it'll be great news for Umbrellas if it was implemented hey Hugo?