Over the years, the construction industry has been subject to a number of changes and reviews. The Inland Revenue, despite a number of attempts, still has two main areas of concern.
The first is fraud, particularly paying “off the books” and the second is the job status of the people working within the industry. Major changes will be implemented in April 2006 to try and address the first point. The second point is a continuing area of risk.
The status of workings i.e. whether workers are employed or self-employed, is not a new subject but the Revenue is targeting it again. Last year the Revenue sent out hundreds of thousands of letters to contractors and subcontractors in the industry warning that they were not happy with the position of workers within those businesses.
The Revenue is trying to establish whether the workers truly are a business on their own account. If, having considered the above tests, the Revenue is not happy, they may reclassify the worker as an employee and may seek to rectify the position for earlier years, with additional tax, interest and penalties being due.
The position is not always clear-cut and a number of factors are used to paint a picture.
A second issue relates to those who are paid gross, rather than net, within the construction industry. In order to be paid gross, a subcontractor must obtain a gross payment certificate and renew this on a regular basis. However, the Revenue is starting to deny renewal where the subcontractor has regularly paid over their PAYE late. Non-renewal may cause severe financial hardship and it is vital that PAYE is paid over on time.
Now is the time to review your own situation. If you would like further information please contact us.
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