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The new payment laws: What clients are telling Hudson Contract

David Jackson | 15th April 2014

HMRC’s latest tax rules, the Onshore Employment Intermediaries regulations designed to shrink the number working under CIS deduction, could have a detrimental effect on the industry. Here are what some of Hudson Contract clients have to say…

Recipe for bankruptcy? One contractor underlines the fact that much of his work-in-progress was won in the past two years at rates applicable during the latter half of the recession. “Some of the main contractors won work tendering at zero margins,” he sighs. “This is confirmed by their quantity surveyors holding up payments, disputing valuations and trying to screw a margin from second tier contactors. Add to this the rising cost of materials and now the new revenue push for everyone to be put on the books and you have a recipe for bankruptcy…”

Absenteeism: Another contractor rang bemoaning the Monday morning no-show after he’d telephones his ‘absentees’. “One of my main brickies didn’t turn in this morning because it was raining – even though it had stopped by half past eight. Another will be missing for weeks because he broke an arm in a fight at the weekend. And another admitted to having a hangover and said he’d probably be in tomorrow.” Before adding “When self-employed lads don’t show up, it’s irritating, but at least I have a pool of labour to draw on. But imagine if we get to a situation where I’m supposed to employ this lot and shell out even when nothing’s produced!”

Agency: A client whose firm also uses agency labour on a contingent basis confirms that as of 7th April, the rates for tradespeople supplied by the agency has increased by 17.5%. And the effect on his business? “With four major contracts on the go, there’s only one – ironically enough, a government contract – where I can pass on the increase. The others are fixed price on developers’ sites. And one of these lasts another fourteen months, with no chance of increasing our rates. It means some lads will get laid off, while everyone else will have to work harder.”

Rubbish advice: A former client who has been doing business with another intermediary payroll provider also called me this week – having been told that all operatives must now set up and go into go into their own limited company in order to remain self-employed. This is rubbish advice, since the new Onshore Employment Intermediaries regulations clearly include measures to penalise any such course of action.

And finally: A client forwarded me a text sent by a freelance builder exercising a right of no mutuality of obligation. The message read: Only texting to say I’m not doing it no more – in explanation of his failure to turn up for work. To which our client responds: “How can anyone expect me to put these people on the books? Those who are self-employed can pick and choose who they want to work for – and they do! Why should I be landed with all this extra paperwork and hassle?”

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