Drop plans for builders, CIOT tells taxman

The Chartered Institute of Taxation has added its voice to the growing cry of criticism of HMRC’s plans for taxing the construction industry.

The professional body has called on the department not to go ahead with proposals in the False Self-Employment in Construction consultation document, which will see a greater number of building contractors being taxed as employees. To be deemed to be self-employed, individuals will have to satisfy one of three set criteria.

Earlier this month, City law firm Reynolds Porter Chamberlain warned that the taxman’s plans, which have come under fire from many tax professionals, will hit the construction sector with massive increases in taxes and red tape.

The CIOT said the Revenue already has the necessary powers to tackle false self-employment, and the proposed new procedures will fail to address the issue of employment rights.

The chairman of the institute’s employment taxes sub-committee, Colin Ben-Nathan, said: ‘Rather than adding further legislation, there needs to be more effective enforcement of the existing rules. The Government should be directing greater resources towards enforcement and, where there is evidence of abuse, crack down hard.’

He added: ‘We are very concerned that the consultation is only about how and when legislation is to be introduced. It does not address the underlying reasons for the perceived problem. In particular, by only considering the tax situation, it does not address issues such as lack of employment rights and benefits.

‘We are also concerned that the proposed measures will have an adverse impact on many who are genuinely carrying on a business.

‘The CIOT considers that no amount of refining of the legislation will prevent those determined to do so from flouting the rules. We have always taken the view that the way to deal with tax evasion is to bring those concerned to account, to apply due sanction and make an example of them,’ said Mr Ben-Nathan.

Categories: News , false self-employment , Income Tax