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Olympic contractors warned over employment status of workers
Posted May 20, 2011
Never far from the headlines, HMRC has issued a warning to companies working on the Olympic Games project to ensure that they do not avoid paying tax and NICs by deliberately misleading over the employment status of their workers and sub-contractors.
HMRC appears to have been spurred on to publish a dedicated news release due to the sheer scale of construction required for the Olympic and Paralympic Games next year (and the potential tax losses if unscrupulous employers fail to meet their tax obligations).
In the strongly worded release, HMRC states:
"...the message is clear - if you deliberately seek to evade tax, HMRC can and will track you down and you'll face not only a heavy fine but possibly a criminal prosecution as well."
In particular, the tax authorities will be targeting employers and contractors who:
- incorrectly classify the employment status of their workers.
- do not deduct the correct amounts of income tax and NICs from workers.
- do not correctly apply deductions under the Construction Industry Scheme (CIS).
- do not pay the National Minimum Wage.
- do not, or incorrectly file their PAYE and/or CIS returns.
Given the significant rise in employers' NIC rates as a result of the last Budget, the temptation to deliberately misclassify workers as 'self employed' for tax purposes is great, and HMRC states that "falsely classing workers as 'self-employed' to avoid tax, National Insurance or NMW can result in severe financial penalties."
Contractors and employers are directed to an online tool to help determine the employment status of their workers.
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