Disclosure of Tax Avoidance Schemes ‚ Employment Products

6 Jul 2017

They are writing to those contractors to remind them of their responsibilities for determining the correct employment status and advising them of the consequences of ignoring the rules. They are also writing to the subcontractors concerned to advise them of what is happening, and where to go for advice. Specimen letters are attached below.

The main leverage exercise will commence in the week beginning 9 August, when approximately 13,000 letters will be issued to contractors and 44,000 to subcontractors. This is the first phase of the exercise and the letters are being sent to contractors and sub-contractors across all regions. This will be followed by further batches of ‚ leverage‚ letters being issued over the coming months.

CIOT members (or their clients) who receive one of these letters are encouraged to consider it carefully and review the employment status of workers if they have not done so already. The Revenue have also asked us to mention that this increased compliance activity is specifically to work towards restoring the level playing field for workers in the industry.

CIOT members will be aware of how difficult it can be to determine employment status, particularly in grey areas. Clearly there are significant advantages to workers of retaining self-employed status, namely the National Insurance savings, the more generous rules for tax allowable expenses and the cash-flow advantage of paying any additional tax liability in 2 instalments with the balance due ten months after the end of the tax year.

Technical Department 020 7235 9381