Construction Industry Status

[Bron-Yr-Aur]

Client ( contractor ) has received what appears to be a standard letter advising that HMR&C are undertaking a review and that there are some doubts about the status of one of their subcontractors.
The subcontractor in question has received a similar mirroe letter.
We propose having the client in to discuss the pattern of working etc.
Assuming the view is that the s/c should properly be an employee what is the best course of action?
If the client starts paying hi through payroll will the revenue just accept and move on or will they then take that as an acceptance that previous payments have been made incorrectly and go back over previous years?
I know there was an 'amnesty' in about 1997. Is there any other ESC or practice which may help?

[deanshepherd]

This can often come down to the particular HMRC inspector dealing with the review.

If the subcontractor is registered with the Inland Revenue and has been properly declaring his income then the inspector may be happy to accept a change in the situation without any retrospective action. If there are a number of subcontractors who are likely to be reclassified then the inspector may not be prepared to let it go so easily.

The 'amnesty' given to reclassified subcontractors in 1997 would not apply today.

I would recommend that you seek professional advice regarding the particular subcontractor's status as there may be a case to argue against HMRC's findings.

Dean Shepherd
dean@mmi-online.co.uk
www.mmi-online.co.uk