HM Revenue and Customs (HMRC) continues to carry out a targeted crackdown on construction contractor cases, resulting in tax revenue increasing by more than half (55 per cent) on the previous year, according to research by NoPalaver.
Figures from the accounting services group suggest HMRC took £78.9 million from construction industry investigations in 2011-12; rising to £122 million in 2012-13.
The construction sector has, by the nature of the business, always had large numbers of self-employed contractors.
HMRC figures suggest there is upwards of 200,000 construction workers registered as self-employed through outsourced agencies; compared with only 50,000 contractors in all other sectors combined.
The tax authority is now forcing businesses and contractors to prove that they have considered their employment situations fully.
Graham Jenner, director of NoPalaver, said: “This can prove extremely difficult. The construction industry is not always exemplary in keeping administrative records.”
Under new proposals due to take effect from 6th April 2014, agencies hiring the contractor to the company - which were previously responsible for paying employment taxes and National Insurance contributions (NICs) - will no longer be affected, with the responsibility soon to be on the company; the end user of their services.
“This makes it more important than ever for construction companies, employment agencies and construction sector contractors to make sure that their tax arrangements are fully compliant with the new legislation,” said Jenner.
“Failure to do so could result in massive tax bills, and loss of vital flexibility in employment.”
If you need to talk about your accountancy and tax requirements as a contractor or subcontractor then you can arrange a free initial consultation with your local TaxAssist Accountant today, by calling our friendly team on 0800 0523 555 or filling out our simple online enquiry form.
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