Revealed: the shocking price of getting it wrong with employment status
5th August 2021 | Hudson Contract
The growing complexity of tax and employment law is giving company directors a headache – many do not fully understand their risks and are coming to Hudson Contract for expert advice.
We know most construction firms have never been so busy but due to the skills shortage a number have reduced their use of labour-only subbies and might just be paying one or two freelancers directly. But this can be just as risky, time-consuming and stressful for you if HMRC gets involved, especially if you are treating them the same as your direct employees in your communications and policies.
To illustrate the point, the CIS liability for just two self-employed operatives at an average weekly rate of £900 would be more than £17,000 in one year if they are deemed to be non-compliant. For 20 self-employed operatives, that liability would be more than £173,000 – and these figures do not include HMRC fines, unpaid interest charges or any legal costs for challenging HMRC decisions.
You can do your own sums using our simple online calculator here.
Ian Anfield, managing director of Hudson Contract, said: “Running a construction firm means you will likely have 101 things on your mind at any time: new projects to tender for, the rising cost of building materials, a lack of skilled workers and making sure you get paid on time and in full.
“Despite the pandemic, the government has pressed ahead with two pieces of new tax legislation which make life difficult for constriction firms – changes to off-payroll working rules known as IR35 and the reverse charge, a shake-up of the way VAT is charged in the supply chain. Recent changes to immigration rules are a further headache.
“With Hudson the message is simple, we deal with CIS, tax and employment compliance so construction firms can get on with growing their business.”
The Hudson guarantee is watertight: If HMRC or an employment tribunal successfully challenges the status of the freelancers on a Hudson contract, the company will provide and pay for the legal team to argue the case. If it loses, it pays the fines or awards, not the client. Hudson has a 100 per cent track record in status cases.
Give the office a call today on 0800 054 1127 for a friendly chat about your arrangements.
Are you IR35 compliant?
Medium & large-sized construction companies are legally responsible – and liable – for determining the employment status of their limited company subcontractors and consultants.