Revenue clamp down on construction self employment

6 May 2011

Tax officials are to target false self-employment as part of a crackdown on recruitment agencies in the construction sector, Construction Enquirer reported.

HM Revenue & Customs had already announced that it would be appoint 100 new inspectors to track down agencies believed to be evading £500m in tax payments. But the Revenue has now confirmed it will also examine the tax status of workers as part of the campaign.

The focus will be on the issue of recruitment agencies wrongly applying employment status laws in order to avoid paying employers National Insurance contributions and other benefits such as holiday pay.

Recruitment agencies reacted with concern, worried that the shift will lead to an attack on self employment in the construction sector, undermining the need for a flexible economic workforce in the current economic climate.

Kevin Green, Chief Executive of the Recruitment and Employment Confederation, said: “We are committed to working effectively with the Government to address examples of bogus self-employment.

“However, it is also critical for the UK economy that we promote legitimate self-employment.

“If we want to retain a dynamic construction industry in the UK we need to retain its use of a skilled and flexible workforce.

“Payroll companies help the self employed particularly with the administration of pay. Together with the review of iR35, we urge the Government to look into this whole area as part of their commitment to help small businesses and entrepreneurs.”

But union heads were quick to welcome the news. George Guy Acting General Secretary of Ucatt, said: “The confirmation that the HMRC is cracking down on false self-employment being undertaken by employment agencies is welcome news.

“False self-employment is endemic in agencies operating in construction and is costing the taxpayer millions of pounds every year in lost revenue.

“Employment agencies must realise that they can no longer get away with falsely self-employing workers and denying them the most basic employment rights.”


I am so plesed to read this, although I have never heard the term "false self-employment" before. The agency I work through have been pestering me for years to go self-employed but I have stood my ground and stayed PAYE. They tell you that you will get more money, but they don't tell you the disadvantages. My decision to stay PAYE has been vindicated since I have been unemployed for 4 months and been able to claim contributions-based Job Seekers Allowance, a benefit not available to the self-employed.

David, 7 May 2011

Having worked within the construction industry for over 30 years, worked as PAYE and self-employed have this issue to raise: -
People working in the UK should be entitled to the same employment rules, regulations and safeguards as any and every employee working in the UK.
To often employers only offer short term contracts or minimum hours of employment to suit their needs, however does not suit the needs of the individual on earning a weekly wage.
It seems that the industry has not changed from the days when construction workers where classed as casual labour and where unable to obtain a mortgage or loans.
Whiles I can appreciate that construction companies inherently are not involved in long term projects and therefore unable to forecast more than probably two to three years in advance I believe it is the Government responsibility to have in place long term construction projects throughout the UK not just in London, continuous employment policies and economical stability in long term goals which would both encourage employers to employ staff as PAYE whiles ensuring confidence in the UK market so private investors are also encourage to invest in the construction industry long term.

Stephen Findlay, 10 May 2011

Hooray, it's about time agencies were clamped down on. I wish they'd ban Agencies(Pimps) full stop. Most self employed rates they pay now are almost the same as paye with-out any benefits at all. I realize we are in a recession but the agency rates have been stagnant/ falling for the past 8 years. Qualified trades now actually end up with less than minimum wage by the time the expenses are taking out. But you are still expected to supply vans, tools all fuel and traveling time/costs for free etc. Why can't construction companies employ labour direct like every other industry, instead of agencies taking a slice.

Peter Armstrong, 27 June 2011

Leave a comment