You will be logged off in  seconds due to inactivity and risk losing your quote. Click here to continue using this web page.

CONSTRUCTION INDUSTRY COMPLIANCE

Davina Chohan 19 May 2019

WHAT DOES IT MEAN TO ME?

ARE YOU A CONTRACTOR WORKING IN THE CONSTRUCTION INDUSTRY USING SUBCONTRACTORS?

If you are not fully compliant HMRC can reclassify your subcontractors as employees and go back to earlier years and calculate the PAYE tax and National Insurance you should have deducted and charge interest and penalties – even if you have deducted the CIS tax! 

What happens going forward?

If you are found not to be fully compliant in addition to going back to earlier years HMRC can insist you operate PAYE in future on all your subbies.

1. Can your business afford to pay sickness pay holiday pay etc in addition to 13.8% employers’ class 1 National Insurance?

2. If you have to increase your rates and tenders, will you still be competitive, and will you still get the work?

3. Will your subbies still want to work for you if you have to reduce their rates, and deduct employees’ class 1 NI at 12%, for your business to remain competitive.

WHAT DO I HAVE TO DO TO CONVINCE HMRC THAT MY SUBBIES ARE NOT EMPLOYEES?

1. Have an up to date contract for services signed by you and your subbie. You could also draft a statement of working practices to confirm that they actually work to the terms of the contract for services

2. Make sure you have a weekly invoice even if it is a self-billing invoice.

3. Make sure your subbie has his own Public Liability insurance and he does not rely solely on yours.

4. Review your practice every 12 months. If a subcontractor has worked solely for you for over 12 months HMRC may take that as an indication of employment not self-employment.

5. Do not let your subbies use your small equipment, they should have their own and never give them a company van.

6. Consider getting a professional compliance review and take out Tax Enquiry Insurance to cover your costs should HMRC come calling.

ARE YOU A SUBCONTRACTOR WORKING IN THE CONSTRUCTION INDUSTRY?

1. What does it mean for me if HMRC do not think I am genuinely self-employed?

2. HMRC can reclassify you as an employee and subject your payments to PAYE even if you are having 20% CIS tax deducted. This will mean you have to pay an additional 12% National Insurance. Your contractor may have to reduce your rates to remain competitive as he will have to pay 13.8% national insurance.

3. How can I ensure that HMRC will agree that I am self-employed?
- Make sure you have a contract for services with your contractor
- Obtain your own Public Liability Insurance
- Make sure you use your own equipment and van wherever possible
- Send a weekly invoice for your services to your contractor.

If you are a contractor or a subcontractor and looking for tax advice please contact us today.

What will happen if my builder isn’t insured and something goes wrong?
What will happen if my builder isn’t insured and something goes wrong?

Rhino Trade Insurance 03 February 2023

When you have building work done on your home, there is always a possibility that damage or injury can be caused. Trade insurers like Rhino Trade Insurance know about this and regularly share content encouraging tradespeople to have the right cover before stepping foot on-site. 

Read more

What’s the difference between a Joiner and a Carpenter?
What’s the difference between a Joiner and a Carpenter?

Rhino Trade Insurance 02 February 2023

The basic understanding we have is that both of these professions work with wood. But what are the main distinctions, the trades characteristics, and the types of insurance available to them? While there is a certain level of cross-over in these trades, let's better understand the main differences between Joiners and Carpenters.

Read more

Supporting Local Tradesmen: How to Find and Hire Quality Professionals in Your Community
Supporting Local Tradesmen: How to Find and Hire Quality Professionals in Your Community

Rhino Trade Insurance 31 January 2023

For anyone who is a fan of the show 'Cowboy Builders', you'll know that there are some horror stories out there. Most tradesmen and women are dedicated, dependable and will work really hard for you. It's the bad apples we want to help you avoid. 

Read more

TALK TO AN EXPERT

Our team of experts are available to talk to Mon-Fri 08.30-17.30 and Sat 10.00-14.00

online chat

Our team are online during office hours. Send a message if you have a query.

call

Call our team of experts during the office hours noted above.

Form

No problem. Fill in our quick form and let us know when’s a good time for you.