Construction industry easy target for HMRC

HMRC takes record £154M from construction industry

HM Revenue & Customs (HMRC) has raised a record £154M after targeting self employed workers within the construction industry.

According to accountancy group UHY Hacker Young, HMRC saw its annual yield increase from £131M in 2014 to £154.2M in 2015, a rise of 17%.

After making the construction industry one its primary targets, the money amassed from HMRC’s investigations into the sector has more than doubled over the last five years.

Due to the “cash in hand” culture of the industry and the large numbers of self-employed contractors and sub-contractors, the tax authority believe there to be high levels of “false self-employment”.

HMRC has said that individuals who find work through intermediary companies should not be classed as self-employed and are subject to PAYE. This means that both the employer and self-employed worker are not making sufficient national insurance contributions.

UHY Hacker Young say those classed as being genuine self-employed by HMRC will require a sub-contractor certificate otherwise the contractor should deduct tax from payments made.

Roy Maugham, Tax Partner at UHY Hacker Young said the construction sector is an “easy target” for HMRC and has seen an increase in “intense” investigations over the last number of years.

He commented: “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 them self to be, or is classed as self-employed by other organisations, it does not necessarily mean that HMRC will accept this status.”

Companies or individuals who fail to provide the relevant paperwork when investigated could be subject to paying up to six years of of PAYE and national insurance contributions, plus interest and up to 100% of the tax in additional penalties.

Mr Maugham said: “Individuals and companies working in the construction industry must make sure that they have all the relevant paperwork otherwise they risk a high penalty from HMRC.

“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.”

The post Construction industry easy target for HMRC appeared first on UK Construction Online.