21 March 2014 #Employment
The Chancellor announced in his budget yesterday that the Government will be clamping down on the use of intermediary companies being used to disguise employment as self-employment.
The biggest sector affected will be construction. However, it seems that HMRC is also concerned about other sectors such as driving, catering and security in using intermediary companies as a payroll mechanism designed to save tax and national insurance.
It is proposed that changes to agency legislation will take place with effect from 6 April 2014 such that an intermediary would need to deduct PAYE and national insurance.
Currently, intermediary companies are able to put in place contracts which allow the worker to send a substitute to do their work and hence it is argued that the worker is not obliged to personally provide services and hence they are self-employed.
The Government will be looking at the issue of personal service in tightening up the rules.
Also, in the construction sector, the government will consult in summer 2014 on options to improve the operation of the CIS for smaller businesses and to introduce mandatory on-line filing for contractors.