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.”
