TaxCorporate Tax‘IR35’ clampdown to hit construction industry

'IR35' clampdown to hit construction industry

The construction industry faces an uncertain future after the Inland Revenue imposed an IR35-style clampdown on self-employed contractors working in the trade.

Link: IR35 special area

The Revenue released draft and secondary legislation last week outlining its plans to penalise construction companies that employ contractors who are not actually self-employed.

‘[The legislation] gives a lot of additional responsibilities to construction companies, and introduces new [fixed financial] penalties against those that don?t comply,’ said Alastair Kendrick, director of tax at Ernst & Young.

He described the legislation as a ‘minefield’ and said that a construction firm has to be satisfied any contractor it employs is a self-employed worker.

‘If the Revenue believes the contractor to be employed then the company is liable for a penalty. The problem is that determining whether the person is employed or self-employed is not easy.’

He went on to say that the Revenue is ‘washing its hands of all policing of the scheme and passing the responsibility on to the companies’.

The legislation will come into force in April 2006 with Kendrick saying smaller firms will be hit the hardest.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson