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Wed June 03 2020

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Construction workers could be missing millions in tax refunds

23 Apr Research by a firm of tax accountants suggests that HM Revenue & Customs could be sitting on millions in unclaimed tax refunds.

PAYE construction workers could be failing to claim £300m a year – and they can still backtrack  claims for four years. 

The sums have been done by a company called Rift Refunds, which makes its money by taking a cut of the tax repayments it gets for clients.

There are an estimated 2.3m construction sector workers in the UK, of whom 1,478,400 are classed as PAYE employees. Unlike self-employed workers who deduct travel expenses as part of their annual self-assessment tax returns, many PAYE construction operatives are required to claim these expenses back from HMRC each year.

Managing director Bradley Post said:  “Last year we claimed £20m back from HMRC for construction workers but we know from our own research that the vast majority are not receiving all of the help that they need in order to claim. The construction industry can be a lucrative one even for the ground level worker and so when things are good, the sum of a thousand pounds might not seem worth the trouble of dealing with HMRC for many.

“However, we also know in the wake of the last financial crisis when work was scarce, these refunds suddenly became a lifeline for many. So for those currently worried about the months ahead, they should contact us to see if we can help them. All that we need is a few basic details. These refunds can also be backtracked over the space of four years so with this considered, the sum of money rightly owed starts to become quite substantial.”

Rift calculates that 31% of all PAYE construction workers who qualify are eligible to receive a refund from HMRC. However, according to Rift, the claims paid out account for just 30% of the total money owed on an annual basis.

The average worker receives a refund of £934 per one year claim via Rift and £3,735 as an average refund for a four-year claim, meaning that the total amount due to the 31% of PAYE construction workers eligible for a refund could sit as high as £428m.

However, with possibly just 30% being claimed each year (£128,416,781), Rift estimates that HMRC is sitting on an annual sum of nearly £300m in unclaimed tax refunds owed to some 320,813 PAYE construction workers.

Show your working: Rifts’s numbers
Description Figure Notes Source
Total construction 2,310,000 Total construction workers ONS (Dec 2019)
PAYE sub-total 1,478,400 PAYE employees in construction House of Commons (Dec 2019)
Total number eligible for a refund (A) 458,304 Estimated PAYE employees eligible for refund (Rift internal data)
Average refund value (B) £934 Average Rift refund (2019) (Rift internal data)
Percentage that claim 30% Percentage of PAYE construction workers that actually claim (Rift internal data)
Percentage that fail to claim 70% Percentage of PAYE construction workers that don't claim (Rift internal data)
       
Total potential refund (C) £428,055,936 Estimated amount that could be refunded each year (A x B)
Total claimed (D) £128,416,781 Estimated amount being claimed (30% of C)
Gap in claims value (E) £299,639,155 Total tax that PAYE employees don't claim (C - D)
Gap in claims over four years (F) £1,198,556,621 Total tax that PAYE employees don't claim over span of four years (Ex4)
Gap in claims number of workers 320,813 The estimated number of PAYE employees that could claim

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