Crackdown on false self-employment brings in 55% more taxes than last year

A crackdown on false self-employment in the construction industry has brought in a record £122m in extra tax for HM Revenue & Customs.

The figure is an increase of 55% on the £78.9m taken in 2011-12 from businesses investigated by HMRC.

False self-employment allows companies to avoid giving benefits to workers, such as pensions and redundancy, and paying PAYE taxes.

Businesses found to be engaging in the practice are liable for the full amount of unpaid tax and national insurance contributions, as well as interest and additional financial penalties.

It has been suggested that it can be difficult for businesses to prove that workers are genuinely self-employed as the industry is not always exemplary in keeping administrative records.

This is a pity, since the flexibility provided by self-employed status is one of the ways both businesses and workers in the construction sector have remained competitive through an extremely challenging period for the industry.

The Government is “aiming a new attack” at 200,000 construction workers who are paid through outsourced employment agencies by attempting to have them considered as employed for tax reasons.

An HMRC spokesman said: “We do not impose employment status because status is always dictated by the facts and is not a matter of choice.

“The consultation is about ensuring that agency staff pay the correct amount of tax and national insurance, safeguarding their entitlement to future benefits.”

Read More: http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/10657061/Construction-probe-nets-122m-in-tax.html