Fresh tax crackdown launched on self-employment

Labour agencies are confident a new government tax crackdown on employment status in construction will not spell the end of labour-only subcontractors.

The government are proposing that all construction workers will be deemed to be employees unless they supply their own materials, provide a substantial amount of plant, or are providing other people’s labour as well as their own.

Plans were announced in the last Budget to tackle the problem of bogus self-employment and a Treasury consultation paper has now been officially launched.

A Treasury spokesman said: "False self-employment occurs where workers are treated as self-employed for income tax and National Insurance despite the fact that the way in which the work is carried out on a day to day basis demonstrates that there is an employment relationship.

"The problem of false self-employment affects not only the ability of compliant businesses to be competitive, but also workers’ entitlement to social security benefits, as well as representing a risk to the Exchequer."

Commenting on the Treasury's announcement Jason Campbell, Chair of the Recruitment and Employment Confederation's Construction Group said: "Many people are correctly working as self employed in construction.  Projects are always time limited and skilled tradesmen and construction workers often choose to respond to their changing workplaces by being in business on their own account.

"However we recognise there are times when construction workers should be employed for tax purposes when they  currently are not.  We will carefully examine the Treasury's proposals.  Any change in status also comes at a cost to the supply chain and it is vital that this is properly understood.  Recruitment agencies are in a position to easily supply flexible workers on a PAYE basis, however it is vital that the supply chain meets the cost of this change and that the workers involved understand its implications."

Alan Ritchie, general secretary of construction industry UCATT, said: "Bogus self-employment corrupts the entire industry. Workers are denied basic rights, they fear being sacked at a moment’s notice, so are unlikely to complain about dangerous working practices. If workers become too sick or old to work they will be denied benefits and will not have an old age pension."