CIS errors by contractors raises £154m in unpaid tax

HMRC’s yield from tax investigations into the construction industry rose by 17% to £154.2m in the last year, up from £131m the previous year as self-employed builders and sub-contractors are targeted by HMRC.

The amount collected from HMRC’s investigations in the construction sector has more than doubled in the last five years, up from £66.9m in 2010/11. Construction typically has a far higher proportion of self-employed workers and sub-contractors than most sectors, and they will often move jobs more frequently. When this happens it’s more likely that mistakes or omissions might be made to paperwork or a worker’s tax status.

Even if a sub-contractor believes themselves to be, or is classed as self-employed by other organisations, it does not necessarily mean that HMRC will accept this status. Companies contracting self-employed workers or sub-contractors must be able to prove to HMRC that these workers are genuinely self-employed. However, often construction companies lack the correct paperwork to prove that their workers have self-employed status, or a sub-contractor certificate.

Threats of punitive penalties mean that companies or individuals who are investigated by HMRC without the relevant paperwork or status might have to pay up to six years’ worth of PAYE and NI contributions, plus interest and up to 100% of the tax in additional penalties.

At EQ Construction we can assist you with your CIS compliance, for further information, please contact one of our Construction team members.