Article Date: 20/04/2009
HMRC Legislation Begins to Bite
Three pieces of HMRC legislation which impact the construction industry are being enforced with devastating consequences.
Employment status legislation, CIS legislation and MSC legislation are all being used to hammer negligent and ill advised construction industry companies.
Essex Builder Fined £800,000
An Essex Contractor that had relied on self-employment contracts, which were put in place by the company’s accountant, to prove that workers were operating on a self-employed basis, has been told by HMRC officials that it considers the firm’s labour only subcontractors to be employed under contract of employment. Backdated PAYE has been levied against the company with an additional £200,000 in fines and penalties, for falsely declaring that workers were employed on a self-employed basis.
Contractors should either seek the advice of a specialist or employ sub-contractors via a thrid party with a proven track record for tax compliancy.
Kent Contractor Loses Gross Payment Status
A Kent specialist contractor made nine consecutive PAYE payments more than 14 days late over a period of 18 months. The company accountant did not warn the company that it was breaching new CIS legislation and last year HMRC notified the company that its Gross Payment Status was to be withdrawn. An appeal in March failed to save the company, which will now suffer a 20% reduction in cash flow at an already difficult time for industry contractors.
Two recruitment companies and three contractors caught by Third Party Debt provisions
The liability for unpaid PAYE run up by a Managed Service Company has been transferred to five companies under the Third Party Debt provisions of the MSC legislation, formally known as Chapter 9 Income Tax (Earnings and Pensions) Act 2003. HMRC is taking action to recoup the unpaid PAYE liability from companies which paid workers via a third party limited company which has now ceased to trade.
If any of the above issues are of concern to your business, call us now on 01268 745808 or attend a free to attend PAYE and CIS surgery at our office in Rayleigh every Thursday