False self-employment in the construction industry
HMRC have published a summary of responses following a controversial consultation process that could lead to self employed construction workers being re-categorised as employees.
This consultation sought views on HMRC’s plans to introduce legislation which could result in a significant amount of self employed construction workers being taxed as if they were in an employment relationship regardless of the length of each assignment.
HMRC received over 100 written responses to the consultation from construction representative bodies, construction companies, professional bodies, accountancy firms and individuals and a number of meetings were held with interested parties to discuss the proposals. The Government considers that, broadly, the responses to the consultation support their assessment that false self-employment persists in the construction industry.
The proposed legislation will deem payments received by a construction worker as employment income unless at least one of the following statements apply:
- Provision of plant and equipment – the construction worker provides the plant/equipment required to complete a job not just tools of the trade
- Provision of all materials – the construction worker provides all materials required to complete a job
- Provision of other workers – the construction worker provides other workers to carry out operations under the contract
A number of responses indicated that the tests for provision of plant and equipment and materials could be refined to operate more effectively. The Government will also explore ways to mitigate the administrative burden of these measures on small businesses.
The Government plan to consult further with stakeholders to obtain additional feedback and input on the draft legislation. No new measures are expected to be implemented until the construction industry is in a stronger economic position.