Merchant customers under tax threat

Published:  03 November, 2009

LONDON: A Treasury crackdown on tax-dodging by builders would penalise the genuinely self-employed, boost the black economy and increase construction costs, said critics opposed the latest initiatives aimed at tackling bogus self-employment.

The Treasury proposals would increase taxes for many construction workers unless they supplied their own materials, a substantial amount of equipment, or other people's labour as well as their own. Just over a third of construction workers are self-employed, about three times the proportion in other industries.

Last week, the Chartered Institute of Taxation urged the government to drop its proposals, saying they would unfairly catch many the courts had deemed to be self-employed while failing to address the issue of employment rights.

The Institute of Chartered Accountants said the scheme would "create a state of limbo for many vulnerable workers who would be taxed as employees without any of the legal protections that such status would bring."

Ucatt, the construction union, which has campaigned against casualisation of the workforce particularly in the house-building sector, supports the measure.

Grant Thornton, professional services firm, said the proposals were "unreasonable" but welcomed the attempt to ensure compliant businesses were not at a disadvantage relative to those that cut labour costs by hiring self-employed workers.

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