CIS & Freelance Builders: What’s the latest Government thinking?

I recently spoke to David Gauke MP, Exchequer Secretary to the Treasury, and had the opportunity to ask him three important questions on behalf of the 2,200+ Hudson Contract clients who rely on freelance builders to meet the ebb and flow of contract demands:

1. Is the Government satisfied with the current running and outcomes of the CIS, or are any changes currently being planned?

The Treasury has no short-term plans to reform CIS. Whilst a watchful eye is kept on the manner in which the scheme is operated, Mr Gauke confirms that a balance needs to be maintained between unacceptable abuse of CIS and the industry’s need to maintain a flexible workforce.

2. Does the Treasury believe UCATT’s claim that there are 300,000 falsely self-employed people working on building sites?

Mr Gauke acknowledged that determining a realistic figure was ‘difficult’. He also acknowledged the speculative nature of the number expressed in the 2008 ‘Harvey Report’, which guesstimated the number of those who were falsely self-employed at between 200,000 – 400,000 operatives . This echoes the view of a senior HMRC executive who told me in January this year that the Revenue does not believe the number portrayed by the construction union as being accurate or reflective of a true estimate.

3. Has the Minister – or his department – read the Burke Report on Freelance Builders?

The answer to this was a definite ‘Yes’, which was reassuring since I personally forwarded Professor Burke’s report to his office! What’s more – and encouragingly for me – Mr Gauke recalled the broad basis of the Report: that Freelance Builders have an important role to play, not only within the construction industry but also for and UK economy as a whole.

I left the meeting with a sense of confirmation that the Treasury has many larger issues to focus upon in terms of tax policy, rather than to consider making changes to CIS.

Mr Gauke clearly recognises construction is a significant economic driver, and I hope he can see with me the many advantages of employed tradespeople working alongside Freelance Builders, on sites everywhere.

And Labour’s view?

This year’s Labour Party Conference asserted that there are 300,000 falsely self-employed in construction dodging £350 million in taxes.

I ardently believe this is a propagandist claim made without statistical quantification. What’s more, the plan to ‘deem’ that many thousands of legitimately self-employed people should be taxed as though they were employed – meaning an instant earnings cut – would be an imposition contrary to a fundamental right of choice… and perhaps even a breach of human rights.

Then again, Rachel Reeves, the Labour MP who made that statement as David Gauke’s shadow, has now been moved to shadow Work and Pensions and I, for one, would like to think the ‘deeming’ plan and its flawed logic will have been quietly lost by the time Labour publishes its next manifesto.