Proposed changes to the taxation of sub-contractors
HMRC have launched a controversial consultation process that could lead to self employed construction workers being recategorised as employees. They would then be taxed through the PAYE system regardless of the length or brevity of each employment assignment.
HMRC point to evidence that a significant number of construction workers are taxed as if self-employed even though they are providing their services to contractors effectively as though they were employees.
This issue of what HMRC are calling "false self-employment" affects businesses compliance records, a worker’s entitlement to benefits and the tax take. HMRC plan to introduce legislation to protect income tax and national insurance revenue. The consultation document assumes that these changes will happen and simply seeks input as to how such changes should be introduced.
Comments on this consultation should be sent by 12 October 2009 to:
False self-employment in the construction industry consultation
Personal Tax Team
HM Treasury, 2/SE
1 Horse Guards Road
Telephone queries: 0207 270 5330