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The Government have recently issued a consultation on “False self-employment in Construction: Taxation of Workers”. It can be viewed here:

What is being proposed is a statutory definition of employment status in the construction industry, using tighter criteria than the current case law based status tests. This would result in sub contractors being denied self employment and having to become contractors employees, with the attendant rights and obligations of employment, increased NI costs, and loss of tax relief on expenses.

Under the proposed new regime, all workers would be employees unless they either:

– supply plant and equipment (other than customary hand tools) – so, for example, larger items of plant such as diggers or scaffold must be supplied.

– supply all of the materials for a job alongside the labour.

– supply the services of other workers, and take responsibility for paying them (presumably under these rules, and therefore by implication under PAYE).

Anyone familiar with the current employment status rules will instantly see these rules are a lot tighter, and will result in increased compliance obligations on the sector.

Interested parties, particularly contractors and sub contractors, should download a copy of the consultation and make their views known to HM Treasury. The deadline is 12 October 2009.