New Revenue attack on bogus self-employment

New moves have been announced by the Inland Revenue (IR) to crack down on bogus self-employment in the construction industry.
A statement from the Revenue said action is set to include:
n Redefining certain workers as employees for tax and National Insurance (NI) purposes.
n Stricter checks on whether contractors' workforces are genuinely self-employed.
n Tougher financial penalties for those found to be ignoring the correct employment status of their workers.
The Revenue has already been given the go-ahead to double the number of staff involved in the investigation of construction employment status.
The IR notes that some representatives of the construction industry have asked the government to consider redefining certain site workers as employees for tax purposes so that they are subject to both income tax through PAYE and Class 1 NI contributions.
The government also announced in the Pre-Budget report that it is determined to tackle non-compliance in the construction industry by firms that "routinely ignore their responsibilities to check whether workers are self-employed or employed and account for tax and NI on the correct basis".
The Revenue added: "Industry representatives have supported the compliance drive, but have asked the government for further measures to create the certainty they require and a level playing field to compete fairly for contracts with those who routinely use falsely self-employed labour.
"In particular, they would like the government to consider wider reform to make labour-only subcontractors subject to the same tax and NI provisions as the employed."
Such measures are to be discussed with the industry in the context of the proposed reform of the existing CIS tax scheme. A revised CIS scheme is scheduled to take effect from April 2006. It will include the introduction of a formal employment status declaration.