Hudson Contract warns about Sham Payroll Companies
5th January 2017 | Hudson Contract
David Jackson (Founder and Chairman)
Ian Anfield (Managing Director)
Jolyon Maugham QC (Specialist tax barrister)
David Jackson - You’ve come across some of these dressed up contracts as it were, where the intermediary takes on the guise of a contractor or a contracting service within the construction industry. How have you found them to be? What are the differences that you have actually seen?
Ian Anfield - Well they’re all variations on a theme. Some of them will say that they are tendering for the work but there is no tender and the intermediary wouldn’t have the means to tender for work anyway. They’ve got no estimators, quantity surveys or project managers. They’re a payroll company. Some of them say that they coordinate and manage the project, which again is just as ridiculous. And other’s try to use the bland banner of being a commercial contractor and they try to be as vague as possible when end-users ask them what that actually means. What I said to them is just read through the contract, you know, if the contract doesn’t reflect the service that you’re asking them to provide then the alarm bells should ring. And I think that most people, you know since the whole Jimmy Carr and Starbucks arguments are now really uncomfortable with schemes were somebody says we are going to say this but really we are that.
David Jackson - The consequences are going to come back to bite them.
Ian Anfield - Yeah
Jolyon Maugham - If you’re asked to present to the outside world and HMRC, in particular, a relationship that does not reflect reality essentially you’re lying to the outside world. I mean not to put to fine a point on it, you are presenting to HMRC a view of the world that is a false view. So you will be treated as if you have entered into a false contract as very often actively engaging the individual that is the sort of circumstances where HMRC are likely to look to impose not merely back tax but also quiet heavy penalties as well.