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.

How To Unwind After a Hard Days Graft
How To Unwind After a Hard Days Graft

Rhino Trade Insurance 25 April 2022

It’s basically summer in the UK. The weather has been absolutely banging! But what with the days lasting longer we were wondering what to get up to on an evening. That’s why we wanted to offer something different today, some decent ideas for unwinding after a hard day's graft. Let’s go!

Read more

Tools In Transit Insurance In a Nutshell
Tools In Transit Insurance In a Nutshell

Rhino Trade Insurance 11 April 2022

Understanding tools insurance should be easy. Here at Rhino Trade Insurance, we provide thousands of UK tradesmen with top cover for their tools.

Read more

Employers Liability Insurance in a Nutshell
Employers Liability Insurance in a Nutshell

Rhino Trade Insurance 28 March 2022

Employers Liability Insurance covers you if you hire any employees and is applicable to both sole traders and limited companies. It also is a requirement if you hire subcontractors who don’t hold their own cover. Subbies that hold their own cover are referred to as ‘bona fide’ and will have their own levels of insurance in place.

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.