Major industry trade associations have formed a coalition to fight off attempts by the government to tackle what it thinks is “bogus self-employment” in the construction sector.
The Treasury believes that many workers who should by normal definitions be classed as employees and are claiming self-employment status to allow companies and workers to avoid tax and national insurance contributions.
The Government has proposed a new set of rules to judge the self-employment of workers. These would see only those supplying plant and equipment to carry out their contract, sourcing and supplying materials or hiring other workers regarded as legitimately self-employed.
The Home Builders Federation (HBF) and the Federation of Master Builders (FMB) have now come together to lead a coalition of large and small companies in the property and construction sector, trade bodies and professional advisers, opposed to current Government proposals to change the tax regime for self-employment in the UK construction sector.
The coalition has also launched a campaign website www.sub-tax.com, and invites builders, building firms of all sizes and anyone else affected or concerned by these proposals to join the campaign.
Tax advisers say there may be a lot of backbench opposition to the moves, following letter-writing campaigns by some of the industry bodies.
The moves could hit sub-contractors very hard – as bids they have priced at rock bottom prices could prove uneconomical when labour costs soar as a result.
Executive chairman of the Home Builders Federation Stewart Basely said: “The nature of house building dictates that there needs to be significant flexibility in how housebuilders employ their workforce. These proposals would penalise both companies and employees alike and it is far from clear they would be easy to implement in practice or fully reflect the risk that individual contractors actually bear. It is important that we do not create any additional or unnecessary barriers to building the homes we know this country needs in the years to come given the scale of housing need that exists.”
Director of External Affairs at the Federation of Master Builders Brian Berry said: “The current proposals will fall hardest on small construction companies whilst leaving black economy traders unscathed. There is widespread anger amongst small building firms that the construction industry has been singled out for special treatment. Increased costs of national insurance contributions would result in higher building costs which would have an inflationary effect on the cost of projects. The timing could not be at a worse time when the building sector is suffering its worst recession in decades. The Government needs to go back to the drawing board and rethink its proposals because what is being proposed is flawed and unworkable.”