A recently issued Government consultation document False self-employment in construction: taxation of workers proposes that every construction subcontractor should be deemed to be in receipt of employment income for all tax and NIC purposes, unless they can satisfy one of the three ‘key tests’:
• they provide plant and equipment (which would be defined as something beyond the tools of the trade they would normally be expected to provide); or
• they provide all the materials required to complete a job; or
• they provide other workers to carry out operations under the contract and are responsible for paying them.
This could mean a 12.8% PAYE and NIC liability for employers in respect of skilled workers who previously were regarded as self-employed.
At a time when the collapse in the housing market has already put the construction industry under pressure these proposals are bound to attract considerable interest before the opportunity to comment on them closes on 12 October 2009.
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