PAYE plan splits industry

Plans to switch 300,000 self-employed construction workers onto PAYE have created a huge split in the industry.

A consultation period on the HM Revenue and Customs proposal will finish next Monday.

And responses to the idea show contractors are split down the middle on plans to bring thousands of workers back on the books.

Leading the anti lobby are major housebuilders, who are fiercely opposed because of their reliance on subcontractors and fears they will not be able to pass on the extra costs to homeowners.

But the UK Contractors Group, representing major league contractors, has broadly accepted the plan apart from concerns about when the law should comes into force.

Bob Whincap, president of the National Access & Scaffolding Confederation, said: "We believe direct employment is good but the industry needs some flexibility. The real issue is that HMRC will end up chasing the bona fide contractors and not the real rogues who cause the problems."

One major contractor added: "We put our people on the books last time the tax man targeted this and have been suffering ever since from being under-cut by firms with self-employed labour.

"Anything that creates a level playing field is fine by us."

Heating and ventilating contractors are against the plan while their electrical contracting counterparts fully support the move.

Suzannah Nichol, chief executive of the National Specialist Construction Council, said: "We have serious reservations about whether this legislation will actually achieve what the Revenue is setting out to do.

"It seems to be creating a third employment status where a worker is on PAYE but hasn't got full employment rights."

Smaller builders fear they will be hit hard by the deemed PAYE legislation.

Liz Bridge of the Construction Industry Joint Taxation Committee said: "We are suggesting that whether a company is VAT registered should be introduced as a test for exemption from PAYE, alongside whether material and equipment is supplied or the individual engages their own workers.

"We believe this is an appropriate test for this part of the building industry."