Spokesmen within the construction industry have stated that the data does not match up with anecdotal evidence and some bosses are concerned about how the ONS collects its data on orders, with companies asked to submit orders about six weeks earlier than before the ONS changed its methods last year. While no one is under the illusion that the industry is booming, these latest statistics have left people scratching their heads.

The Construction Products Association says 48pc of its members enjoyed a rise of sales in the opening three months of 2011, compared to just 14pc in the final quarter of 2010. A spokesman for the CPA said: “The latest figures from ONS indicate that construction output fell by 4pc in Q1, but this conflicts with our evidence from contractors, specialists and construction product manufacturers as shown in our latest Construction Trade Survey that both workloads and sales rose in the first quarter of 2011.

Many have also been quick to say that the mild and dry unseasonal weather coupled with a rise in sales for many companies clearly points to an improvement in the industry rather than a contraction.

HMRC have stated that they want to avoid where multiple inspectors would make compliance visits in consecutive months. However, businesses deemed to be ‘high risk’ for underpayment will be firmly on HMRC’s radar and they would be automatically assessed for a full range of taxes.

“We want to get off the back of honest businesses,” said an HMRC spokesman.

Form June it will be testing the new procedures for a period of 6 months before rolling it out nationally in January 2012. David Gauke, Exchequer Secretary, said: “We know that agents, individuals and businesses find some of HMRC’s current compliance practices drawn out and costly. A single compliance process could help HMRC improve the customer experience and reduce costs.”

Gillian Econopouly, head of policy at the Recruitment & Employment Confederation, says: “We cannot lose sight of the fact that the jobs market remains volatile.

Recent reports by REC shows that while hiring activity in certain sectors is steadily increasing, there is still concern over the effects of public sector cuts and the creation of a two speed jobs market. However, employer confidence is on the rise and there is a sense of optimism surrounding the current landscape of employment. Whether the younger end of the spectrum will benefit from any new found confidence from employers remains to be seen.

Nigel Meager, director of the Institute for Employment Studies has stated that: “The latest official employment figures provide further confirmation that the recovery in the UK labour market is faltering and somewhat anaemic. The worse news is that big public sector job cuts will shortly pull out the bath plug, and overall employment levels may well fall again.” Meager has also stated that he believes that the UK is faring worse under the recession than many other countries. By early 2011 UK unemployment had fallen only 2%. This is in stark contrast to countries like Italy and Germany who saw a fall of 4% and 18% respectively.

Some construction projects in the UK have been idle for as long as 2 years and many construction companies did not have the staff to meet the growing needs of the industry. Sensing that there is still a lot of construction that needs doing in the country many recruiters have begun to expand their teams to handle to potential influx of projects that need staffing.

The Totaljobs Barometer, released in April, indicated that the construction sector was one of the main industries helping to lead recovery in the UK jobs market. There was a 30 per cent increase in the number of available construction jobs during the first quarter of this year, when compared with the final three months of 2010. Hopefully this is an indication of good things to come.

At present, despite denials one thing is certain: when the taxman charges 3pc on overdue bills but only pays 0.5pc on overpaid tax it is due to repay, then HMRC has a vested interest in delay. These delays in tax refunds have become more common in recent years but it has been made substantially worse by HMRC taking as much as ten weeks to carry out security checks on individuals due refunds. There is no denying that there is a need to carry out these checks but a waiting period of ten weeks is undeniably long and excessive.

Individuals are now being advised that completing a self assessment tax return may not be enough to produce a refund where one is due and that they should be prepared to chase HMRC sooner rather than later.

A spokesman of HMRC has stated that: “Most refunds are made very promptly but we carry out a range of automatic and manual checks to make sure the refund is a genuine one.

“Also, the rate of interest on overpaid tax reflects the average commercial rate for a return on deposits. No commercial body has the same rates for both paying and charging interest.

“The rate of interest charged on unpaid tax is designed to encourage payment at the right time and to recompense the Exchequer for the loss on taxes paid late. If the interest rate on overdue tax was too low, it might encourage people to treat HMRC as a source of cheap credit. If the interest rate on overpaid tax was too high, it might encourage banking with HMRC.”

The question we all need to ask is can we call outright incompetence an attempt to profit. It may boil down once again to the sheer complexity of the tax system but surely not everyone out there suffers from these errors. A lot would agree that HMRC need to take a long, hard look within.

The Freelancer and contractor Services Association (FCSA) have particularly highlighted this case and has urged all recruiters to take note of ignoring the very real danger of ignoring compliance in this area. Couple this with the AWR, due to be implemented in October this year, it becomes obvious that now is the time to tow the line were compliance is concerned.

The FCSA has stated that: “Since its creation, FCSA has advised of the need to take this issue seriously and ensure appropriate due diligence is in place to manage this risk.

“In simple terms, there are two different ways of doing this correctly. One is to leave contractors and freelancers alone to gather their own information on the different ways of working available to them and allow them to choose an appropriate service provider without help.”

They have also advised agencies to have a preferred supplier list (PSL) of organisations which are providing their service in a fully compliant way.

David Pattison, senior analyst at Plimsoll has stated that ‘62% of companies have seen their gross margin fall in the latest year. Unfortunately, many are reluctant to pass on price rises for fear of losing customers to cost-savvy competitors. However, falling profit margins across the industry is the first warning sign that this strategy has become unsustainable.

Over the past 2 years the average profit margin in UK recruitment has dropped by 2%. In light of this Recruitment companies are faced with the tough decision of protecting their market share and inevitably continue to loss money or adjust their prices to reflect their increased costs. At this stage, bearing in mind that recruitment is currently a very opportunistic environment, any solutions presented will seem very lose/lose to any company considering their best option of recovery.

It could be argued that it will fall to government to fashion a solution but with them still entangled in cuts on everything this prospect seems unlikely. However, some companies are forecasting recovery but volumes remain well down when matched against historical figures. It has also been argued that the implementation of the AWR will have an increasingly negative effect on the company.

The documents in question state that the government will commit to setting up a dedicated helpline staffed by specialists. The decision to retain the existing IR35 format was seen as the better option as the government believed that complete abolition of it would put ‘substantial revenue at risk’.

It was also stated during the proceedings of deciding what to do with IR35 that removing it completely would clash with the upcoming AWR regulations due to be implemented in October this year. Others have also made the comment that it is easier to better the devil you know rather than putting something new, and potentially worse, in place.

As a background to IR35 it was proposed in the 1999 Budget of the then Chancellor Gordon Brown to target ‘disguised employment’ — workers who receive payments from a client via their own company.

These payments are not subject to NICs [National Insurance Contributions] as they can be treated as dividends, and workers can also save tax by splitting ownership of the company with family members to place income in lower tax bands. With the ideas out forward it will probably be better enforced in future.

At the time, accountants urged those who had been sent tax demands to appeal using A19, the “extra-statutory concession”. As a result of that David Gauke, a treasury minister, has disclosed that 23% of those who used the concession have had their tax debts cancelled. This is despite the fact that Mr. Gauke claimed in parliament last year that it “does not apply that often in practice and I do not want people to build up their hopes that it will offer some kind of panacea”. A further 250,000 pensioners had already had their tax cancelled under the concession.

Under the concession, HMRC will back down if the taxpayer can reasonably prove that their tax affairs are in order. There is also a 12 month rule under which tax can be written off if the victim was told by HMRC more than a year after the end of the tax year that information was provided and there is no limit to the amount of money that can be written off under the concession.

A spokesman for HMRC denied that the tax office had deliberately discouraged those who owed money to appeal under the concession although it would not surprise anyone if they had done this. “All our experience indicated that this concession which we developed will apply only in a small number of cases,” he said. 23% does seem to be the low number they were expecting and once again we’re all asking ourselves if HMRC actually know what they are doing.

On the one hand the OTS has said that HMRC should better enforce the rules in order to reduce tax avoidance by way of false self employment. However, at the top of the list is the suggestion that IR35 should be abolished in favour of being replaced by a ‘genuine business test’. These two key options in the report point to one simple fact- they have no idea what they want to do with IR35. At this point in time it sounds like an idea that is being kicked around in a back room of HMRC and the OTS. It is clear that they have recognised key problems with IR35 but structural changes are way off from being implemented.

In the meantime the OTS wish to ‘stimulate debate’ on the matter in order to come up with a viable solution. John Whiting, Tax Director at the OTS, said he expected the Chancellor to respond to the “provisional recommendations” in the report.

“Our aim is develop practical ideas that will make things easier for small businesses when it comes to their tax responsibilities,” he said.

“Having listened to the concerns raised through our roadshow events and many representations, we hope we’ve identified the main problem areas and that people will agree these initial recommendations will improve matters. We’ve suggested ways forward on the thorny issue of IR35, though it’s clear there is no easy solution there.”

It is clear that it will probably be awhile before we hear anything solid on this situation.