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Brickies' tax dilemma prompts panic talks

NEWS - Major house builders could be forced to directly employ thousands of workers under tax shake-up

BRITAIN'S biggest house builders held emergency talks with the Inland Revenue last week over fears they will have to directly employ thousands of bricklayers.

The house builders are panicking that their labour costs will shoot through the roof if the tax authorities force them to take brickies back on the books.

One industry expert said: 'It is the major players in the house building sector that are really getting worried about this because they have thousands of bricklayers as labour-only subcontractors.

'The way the Revenue is looking to reclassify the industry they would have to go on PAYE, which would be a sea change in the way the industry employs people.

'It is the house builders which supply things like materials and cement mixers and the brickies just provide the labour on long contracts, which means they should be directly employed.'

The house builders have employed a team of top accountants to argue their case.They are worried their opinions have not been heard in the long-running debate over employment status.

One source at last week's meeting said: 'The meeting with the Revenue was to say to them 'before you make a decision we want you to have fully understood our point of view'.They were quite receptive to what we had to say.'

The question of employment status is currently splitting the house building sector.A source at one smaller firm said: 'We tend to employ our own people but that causes problems with the volume house builders.

'When the big boys start a job near us they just advertise that everyone can work for them as self-employed and often nick a lot of our brickies.

'The whole idea of this tax change is to create a level playing field, so I don't see why the bigger firms should get any sort of exemption.'

The Revenue is currently considering plans put forward by the Construction Confederation for a 'business reality test'that would force workers to prove they are legitimately self-employed on grounds such as owning their own tools and working for a number of contractors.

Construction News understands the Revenue has recently told the man in charge of the issue at the Treasury, financial secretary John Healey, that such a test would result in an overwhelming switch to PAYE.

But the Revenue is concerned that forcing such a switch could result in workers flocking into the black economy as well as encouraging a huge rise in composite company membership.