New Construction Industry Scheme Effects Employment Law
First of all, you need to understand that the new construction industry scheme is actually not just for the construction industry. It applies to any situation where a contractor hires a sub contractor. The stated reasons for the new construction industry scheme basically amount to getting more tax money out of the industry. The idea is that contractors need to get the employment status of their workers correctly stated, but as with IR35 this can be contradictory with other legislation. Additionally, the HMRC vat states that it should remove burden from construction companies, but it actually amounts to more paperwork, more filing, and more payments.
The new construction industry scheme requires contractors to deduct taxes from their sub contractor’s pay, and send it in to the government HMRC as they would a regular employee. Effectively, sub contractors are no longer self employed. This creates a lot of employment law issues for sub contractors and contractors alike. The decision of whether or not the sub contractor gets certain benefits as an employee may be up in the air, since traditionally sub contractor’s do not receive these benefits. This legislation alone is enough to warrant the fact that most tax consultancy firms now offer employment law advice as well as health and safety advice. If you are in the construction industry and do not understand this new law, you should get help with filing your tax self assessment this year.