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Accountant warns contractors over 'false self employment'
Posted Aug 11, 2009
A contractor accountancy firm has warned contractors to be on their guard as the Government plans its latest attack - this time on so-called 'false self employment'.
'False self-employment' in construction
At the end of July, the Government launched a new consultation document which aims to tackle situations where construction workers consider themselves to be 'self employed' for tax and NI purposes, but whose working practices indicate that they would ordinarily be 'employees'.
The proposals would subject CIS registered workers to normal PAYE rules unless a number of self-employment indicators are met.
Limited company construction workers will have to determine whether the proposed restrictions apply to their work first, and if they don't, such workers will still need to work out if they are caught by the IR35 rules or not, before knowing if they are considered to be 'employed' or 'self employed' for tax purposes.
What about IT contractors?
Although it is clear that the 300,000 or so labour-only construction subcontractors are the principle targets of these proposals, contractor accountants Danbro have pointed out that anyone else who HMRC deems to be an 'employee', but is not being taxed as such, is also likely to face a future bill for unpaid tax as well as a sizeable fine.
Michael Rhodes, the firm's business development manager explained:
"We wouldn't advise anyone to operate through a self employed model who we did not believe was genuinely self-employed. On initial contact with any person enquiring about our service, we go through a working practice review to help us recommend the most tax efficient and compliant option available, pointing out the potential tax liabilities and penalties that may be charge to anyone who gets the self-employment or employed question wrong."
You can read more in our original article on false self-employment in the construction industry.
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