Earlier this month, consultation closed on HMRC’s policy document to reduce tax evasion and avoidance entitled “Onshore employment intermediaries: false self-employment”. https://www.gov.uk/government/consultations/onshore-employment-intermediaries-false-self-employment
If the proposed legislation is enacted as currently written, all individuals on agency contracts will have income tax and National Insurance Contributions deducted at source, as agencies will not be prepared to take on the associated tax risk. The impact on both the Construction Sector and the economy could be significant, with a large number of contractors facing a tax liability of up to 25% and the workforce, which is flexible by nature, diminishing as a result. The potential impacts are further highlighted here: http://www.constructionenquirer.com/2014/02/20/tough-stance-on-tax-change-stuns-contractors/
Ever since the introduction of sub-contracting there has been a tax minefield, resulting in mistrust as to how the tax on human effort is accounted for, and who pays? Is it the client, is it the Tier 1 Contractor, is it the Tiers 2, 3 etc. or is it the individual? And who benefits? Is it all or any of those above? Is it the Treasury?
It should be easy to answer these questions but when tax is involved it never is. It is clearly an emotive subject but one which needs to be correctly addressed to ensure that those who contribute to success are not unfairly penalised and that those who benefit pay a fair price, including taxes. Out of this minefield, is it possible to create a level playing field?
Unrealistic and naïve? Probably, but what is the point of having a consultation unless these knotty issues are properly debated by those affected?
If this proposed tax legislation is introduced in the Finance Bill 2014, in April, what will be the impact on your business? Has it been recognised as a risk to your business? Do you have sufficient provisions to cover the implications?
We would like to hear from you so that we can assess the impact and review the actions to be taken to ensure that the encouraging signs of improvement in our sector are not reversed.