HMRC’s yield from tax investigations into the construction industry rose by 17% to a record of £154.2m in the last year, up from £131m the previous year as self-employed builders and sub-contractors have been targeted by the taxman
The amount collected from HMRC’s investigations in this sector has more than doubled in the last five years, up from £66.9m in 2010/11, according to research by UHY Hacker Young..
Roy Maugham, tax partner at UHY Hacker Young, said: ‘The construction industry is seen as an easy target by HMRC and has been subjected to increasingly intense investigations in the last few years.
‘Construction typically has a far higher proportion of self-employed workers and sub- contractors than most sectors, and they will often move jobs more frequently. When this happens it’s more likely that mistakes or omissions might be made to paperwork or a worker’s tax status.
‘Even if a contractor believes themself to be, or is classed as self-employed by other organisations, it does not necessarily mean that HMRC will accept this status.’
UHY Hacker Young adds that companies contracting self-employed workers or sub-contractors must be able to prove to HMRC that these workers are genuinely self-employed. However, often construction companies lack the correct paperwork to prove that their workers have self-employed status, or a sub-contractor certificate.
Threats of punitive penalties mean that companies or individuals who are investigated by HMRC not have the relevant paperwork or status they might have to pay up to six years’ worth of PAYE and National Insurance contributions, plus interest and up to 100% of the tax in additional penalties.
Changes implemented in April 2015 mean that employment intermediaries are also now required to provide quarterly reports reflecting all the workers on their payroll not subjected to PAYE.
Maugham said: ‘The increased yield from tax investigations and the new rules indicate just how much HMRC are clamping down on tax evasion in the construction industry, and this trend is likely to continue in the future.’
Sign up to our newsletter
If you would like to receive regular news alerts about breaking news and developments in tax, accounting and audit, sign up to receive our free newsletter www.accountancylive.com/newsletter
