Changes afoot to tighten CIS rules on ‘false’ self employment

To combat what is perceived as ‘false self employment’ in the construction industry the government is consulting on proposed changes to the CIS rules in an attempt to recover an estimated annual loss of £350 million in tax and national insurance contributions.

With a due consultation date of 12 October 2009, it remains unclear whether the proposal could become legislation in time for the start of the tax year 20010/11 – but this is still an unknown.

According to the Government there are around 300.000 individuals who could be caught, resulting in tax and NIC being withheld at an employee rate rather than the current CIS self employment rate.

The intention of the government is to move away from the more abstract form of balancing contractor work terms and instead including a list of conditions to be met in order to be treated as self employed.

In the second half of the tax year there should begin to appear a lot of commentary on proposed changes in the main stream media.

If you want to know what the Revenue view is on your self employment status then link to their rather basic e-tool (click) and if you require assistance then please contact me.

The link with examples and the detailed proposal is included here – click

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This article is for discussion purposes only and does not represent advice on which you should act without consulting a professional as tax legislation is complex and changes frequently.

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