Contractors potential exposure to Inland Revenue

Construction industry contractors could face charges far in excess of annual sub contractor costs.

Speaking at a construction industry event held at the Building Centre in London, tax specialist Carl Whittaker, a construction industry tax consultant, assisting the Professional Builders Group (PBG), advised contractors to assess their potential exposure to Inland Revenue (IR) claims, which could be enforced if the IR finds that sub contractors, historically classified as 'self-employed', should have been treated as 'employees'.

Whittaker, of Qdos Consulting, said: "Contractors must assess the financial risk of having 'self employed' sub contractors reclassified as 'employees'".

"Key indicators for establishing this risk include the use of control by the contractor, the right of substitution, the use of liveried vehicles, the length of time in service with one contractor and any other factors pertaining to the professional relationship between contractor and sub contractor.

"A small contractor with just 10 sub contractors on his books could face charges of over GBP 100,000 in back tax, as the IR can claim lost revenue going back six years.

Robert Ryce, PBG Managing Director, said: "Through our working relationship with Qdos, our subscribers are benefiting from a bespoke risk assessment service to help contractors identify possible areas of risk".

"A solution is then tailored for each company to build and present their own individual defence in the face of a potential IR challenge.

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