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Firms ‘aid construction tax evasion’

Firms ‘aid construction tax evasion’

The construction industry is dodging tax and leaving staff without employment rights by registering them as self-employed, an undercover investigation by construction union UCATT has revealed.

Construction firms have been switching permanent employees to self-employed subcontractors with the aid of specialist payroll firms in a bid to avoid paying hundreds of millions of pounds worth of tax.

The workers subsequently lose their holiday entitlements, sick pay and company pensions, as well as the right to earn the national minimum wage. UCATT estimates the payroll companies make millions from the scheme, by using tax relief claimed against workers’ expenses to pay for employers’ national insurance and their own fees.

The union posed as a family construction firm called Fairbrother Builders in the investigation. Most payroll companies advised Fairbrother it could save money by switching its 15 permanent workers to self-employed. The business would operate as normal.

A statement by HMRC read:

“False self-employment across all sectors is a recognised risk and we deploy compliance resource to police the risk, proportionate to other risks.

“The Government is determined to tackle both tax avoidance and tax evasion and committed £900 million over the spending review period to enable HMRC to tackle arrangements that seek to minimise or evade taxes.”

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