Subcontractor or Employee – Which are you?
Over the years, HM Revenue & Customs have taken a number of measures to
combat the perceived lack
of compliance in the construction industry, concerning individuals being subcontractors when they should be employees
. They have recently issued new proposals, which may come into effect on 12 October 2009.The proposals state that for tax purposes subcontractors should be classed as employees and subject to PAYE and National Insurance Contributions (NIC) unless one or more of the following apply:
• The subcontractor provides all materials to complete a job;
• The subcontractor provides plant and equipment. This does not include tools normally provided by themselves to do the job;
• The subcontractor provides workers to do the work and is responsible for paying them.
If the new proposals go ahead, contractors will need to consider whether reclassification is appropriate for their subcontractors and will also be responsible for making the subcontractor an employee, in order to apply PAYE/NIC through the payroll system.
For more information about the new proposal, come and talk to our team.