A clampdown by the Inland Revenue on the tax treatment of subcontractors in the construction industry will be repeated next April in an effort to recoup £120m in lost tax revenues.
Earlier this month, the Revenue sent 13,000 letters to contractors, and 56,000 to subcontractors, in an effort to crack down on disguised employees in the construction industry. The move mirrored the department's IR35 battle with IT subcontractors.
'We hope that improved compliance with the employment status rules will yield an estimated £40m this year and £80m next year,' a spokeswoman for the Revenue said. 'This exercise will be repeated in April next year to a further group.' Alistair Kendrick, director of tax at Ernst & Young, said the Revenue had been approached by the industry because it was 'unhappy' with the way subcontractors were being regulated.
'Certain interested parties have been lobbying ministers,' said Kendrick. 'They believe that there needs to be a clear understanding of the status of workers. They just want it properly regulated.'
The Revenue confirmed the news, and said it had been approached by 'members of the construction industry and trade unions' because they were worried 'not all contractors were meeting their responsibilities on employment status'.
Research carried out by UCATT estimated that there were between 300,000 and 400,000 false self-employed workers in the construction industry, and that the situation was costing taxpayers up to £2bn a year.
Full Article:Accountancy Age