It is alerting HM Revenue & Customs to a variety of scams in a bid to help investigators pinpoint those who are guilty of tax fraud.
“We have plenty of first-hand experience of umbrella providers and gangmasters who make payments net of tax and then disappear without trace – neither we nor the Revenue ever see them again,” said spokesman Dave Simpson.
Members of Freelance Builders are aware of many forms of apparent tax evasion, he said, including umbrella service providers that sit behind agencies. These are often explained to labour-only subbies as “You work for yourself”, said Freelance Buildders. Earnings correspond to the minimum wage – meaning low NI and tax contributions – while the workforce is permitted to claim generous tax-free expenses without any need for receipts.
Another approach is a payroll company that pays its workers from the Isle of Man so it appears that no tax is deducted at all. “Construction workers get paid in full and completely off the CIS radar, which not at all good for us when our income has to be declared at year-end and the tax falls due,” said Freelance Builders.
Another is where a payroll company makes payments via a bank in Cyprus. “The CIS statement is never sent and the amount ‘lost’ to us as tax is never explained or justified. It’s also notable that the amount deducted can vary, even when gross earnings are constant,” Freelance Builders has found.
“That’s just the tip of the iceberg,” said Simpson. “The expanded HMRC team should be able to meet their target for recovering lost tax with ease if they look on the internet for agencies and payroll companies. It’s pretty easy to distinguish the rogues from the legitimate providers for freelance builders. Those who do things properly have nothing to fear. But we will certainly be happy to pass on details of those we suspect of fraud.”
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