HMRC have published a consultation document entitled ‘False self-employment in
construction: taxation of workers‘ dated July 2009

The main thrust of this document is that the HMRC believes that too many workers in construction are being paid as self employed contractors, when really they should be paid as employees. HMRC wants to make ‘Payers’ responsible for determining whether the worker is an employee or self employed. If the worker is an employee, then the Payer is also responsible to ensure that Employers NI and PAYE are deducted and paid in full.

At the moment the HMRC concedes that it is very difficult to prove a contractor is really an employee, if the proper contracts are in place. Therefore it aims to replace individual assessment with three simple tests:

1. Provision of plant and equipment – that a person provides the plant and equipment
   required for the job they have been engaged to carry out. This will exclude the tools
   of the trade which it is normal and traditional in the industry for individuals to
   provide for themselves to do their job
2. Provision of all materials – that a person provides all materials required to complete a
   job
3. Provision of other workers – that a person provides other workers to carry out
   operations under the contract and is responsible for paying them.

A worker will have to meet one or more of these three criteria in order not to be deemed
to be in receipt of employment income.

The Government state it is not their intention to implement any changes until the industry is in a stronger position

If Implemented, How will this affect the industry, and Zeva in particular?
The ‘Deeming’ Process is already being carried out by responsible companies such as Zeva. We call it ‘Assessment’. At the start of every project, the contractor is assessed by Zeva under the current rules whether he is an employee or self-employed subcontractor. Contracts are then produced that reflect this contractor/sub-contractor relationship. Only a change to the criteria of that assessment is being proposed by HMRC. If this isn’t being done by your current supplier, then these changes are imaterial anyway, and contractors would probably be assessed by HMRC as employees, and the HMRC can seek repayment of unpaid NI and PAYE as per Transfer of Debt rules

There was no proposal to change the treatment of umbrellas within the document, so if this proposal goes through in its current form, we may see a move from sub-contractor solutions to umbrella solutions. Zeva is confident it can embrace these changes very easily when, or if they finally occur. Zeva already assesses all its contractors for employment status, and periodically reviews this status. The changes suggested will actually make this review simpler. As Zeva provides services for employed and self employed worker we see no threat to our business. In fact we see an opportunity, as Agencies dealing with Zeva would only have to assess Zeva, as employed or not employed, instead of each individual contractor. Zeva would be able to continue to provide the self employed review service with the simpler criteria, and our customers could continue with their business in 100% confidence that this critical task was being executed with 100% compliance