122m extra tax from construction workers

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The steep rise follows investigations that HMRC conducted in the last year into construction contractor cases, resulting in tax revenue increasing by 55% on the previous year, research by accounting services group NoPalaver shows say Harris & Co accountants Northampton.

According to the firm’s figures, HMRC took £78.9m from construction industry investigations in 2011-12.

The construction industry has always had large numbers of self-employed workers.

But NoPalaver director, Graham Jenner, said that now, HMRC is now forcing businesses and contractors to prove that they have considered this fully.

‘This can prove extremely difficult. The construction industry is not always exemplary in keeping administrative records,’ said Jenner.

He warned that the outcome of the recent consultation on ‘onshore employment intermediaries’ was likely to have a significant impact on the construction sector.

HMRC figures suggest there are around 200,000 workers in the construction sector who are registered as self-employed though outsourced agencies, compared with only 50,000 workers in all other sectors combined.

Under new proposals due to take effect from 6 April 2014, responsibility for paying employment taxes and national insurance contributions (NICs) could pass from the agency hiring the contractor to the company, which is the end user of their services.

Jenner said: ‘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. Failure to do so could result in massive tax bills, and loss of vital flexibility in employment.’ 

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