The Treasury have announced consultation on proposals to introduce a statutory definition of ‘deemed employment’ for construction workers to assist them in combating, what they describe as, ‘false self-employment in construction’.
Under the proposals for new legislation construction workers would be deemed to be employees unless they pass one or more of the following tests:
- They provide the plant and equipment required for the job that they have been engaged to carry out. This excludes the tools of the trade which it is normal and traditional in the industry for individuals to provide for themselves;
- They provide all materials required to complete a job; or
- They provide other workers to carry out operations under the contract and are responsible for paying them.
The criteria would be applied to the work done for the person whose main business consists of carrying out or commissioning ‘construction operations’ as defined in the CIS regulations. They will have to ensure that they have sufficient information to apply the criteria; if they don’t, then the default position will be that the payment is employment income and normal PAYE and NIC rules will apply.
HM Revenue & Customs believes up to 400,000 site workers are registered as self-employed when they should be employees, saving both contractors and workers money in terms of tax and NI contributions. It is estimated that this loss of ‘income’ for the Treasury amounts to £350 million.
The treasury have launched consultation on the proposals. This will close on 12 October, with a final decision expected early 2010.
For further information on the proposals or to take part in the consultation visit the Treasury website.
