Concerns over plans for the construction industry

HMRC has had a nightmare dealing with the construction sector but they intend to persist with plans to clean up the industry.

Estimates claim that false self employment in the construction industry is costing the Treasury around £350m a year.

A new consultation opens up the possibility of a 3 point criteria test to assess whether a worker falls into the self employed bracket. The tests centre around the provision of materials, tools or labour on site.

Advisers however suggest that these criteria are too simplistic for site construction workers. HMRC is sticking to its guns, although they admit that many interested parties, including recruitment agencies, are concerned about the tests.

Respondents have said that these tests are far from perfect citing the fact that it is often impractical to provide your own materials and equipment on a job.

HMRC, on the other hand, believe that these tests form a 'solid start' in developing new legislation but agree that 'further development' is necessary. Another criterion that they are examining is the introduction of VAT registration for self employed workers. If that proposal came into being, self employed workers would have to file quarterly records thus giving the taxman the opportunity to keep a close eye on the individual.

There is also concern that these tests could lead to false behaviour between workers and construction companies. Previous dodgy transactions have included the sale of materials to a worker only for the worker to sell them back again, and making it look as if equipment has been bought when in fact it has just been hired.

The REC has also expressed concerns about these tests. They believe the tests could lead to people who are genuinely self employed and working through agencies, being taxed as employees. The REC plans to continue discussions with HMRC and the Treasury to ensure that flexible resourcing continues within the construction industry.