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Revenue should listen, not lecture

AGENDA

RELATIONS between the Inland Revenue and the construction industry have been nothing short of hostile in recent months.

The tax inspectors' crack down on self-employment has often looked heavy-handed, with a pernickety attention to detail.

For example, one company recently came under fire for allowing a worker a one-off, tax-free living expense of £7 rather than the stipulated £5.

Tax inspectors are entitled to pick on such cases but no wonder firms complain bitterly about the pressure they are under.

This sort of attitude misses the big picture.The system of self-employment is in chaos and needs to be rectified urgently.

This week's big pow-wow in London between tax chiefs and leading lights in construction is a start which shows there is room to negotiate an end hostilities.

If the Inland Revenue has any common sense it will recognise it needs to win over contractors if it is to have any chance of computerising payment deductions next year.

A first step is for the tax office to stop lecturing and start listening.

Contracting firms will bend over backwards to sort out the mess surrounding the definition of self-employment because they are the ones who are really feeling the pain - losing work to unscrupulous rivals on the one hand and losing onceloyal workers who refuse to return to PAYE on the other.

The problem is not intractable.The Revenue simply needs to take the burden for classifying workers away from employers.

If PAYE and self-employed workers were taxed similarly at source then the essential problem would be solved.

Genuinely self-employed workers could claim a tax refund from the Inland Revenue, which would test employment status.

This probably could only apply to construction, but it would not be the first time that the industry has been treated as a special case.

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