CIOT criticises planned construction tax changes

Date: 30th October 2009

HM Revenue & Customs (HMRC) has been urged against going ahead with plans to toughen up tax rules covering self-employed workers and contractors in the construction sector.

On the back of an investigation into the industry, tax officials argued that there is a serious issue of 'false self-employment' in the sector, with many sole traders and other small businesses adjusting their status so as to benefit from tax breaks.

As a result, plans have been put forward to clamp down on such abuses of the system, effectively through treating all workers as being in receipt of employment income for tax purposes, unless they can prove otherwise.

However, the Chartered Institute of Taxation (CIOT) has now argued that the proposed measures are unnecessary and has called on HMRC to focus its efforts on making better use of the powers it already possesses.

"Rather than adding further legislation, there needs to be more effective enforcement of the existing rules," said Colin Ben-Nathan, chairman of the CIOT's employment taxes sub-committee.

"The government should be directing greater resources towards enforcement and, where there is evidence of abuse, crack down hard on evasion."

These coments come after the CIOT argued that those self-employed workers whose tax returns miss the latest deadline as a result of the postal strike should not be fined.