A report published this week claims that tax evasion through false self-employment in the construction industry is costing the
The study by Professor Mark Harvey of
Professor Harvey explained: ‘False self-employment is adopted as a device to reduce tax liabilities and employer responsibilities. It occurs through the Construction Industry Scheme (CIS), a self-employment tax scheme peculiar to the construction industry. Unlike genuine self-employment workers they are paid wages rather than work for a client under contract, have set hours of work and have tax deducted at source.
‘The UK construction industry has been characterised by high levels of false self-employment for several decades but recently this level has risen significantly.’
According to the report, much of the recent rise in false self-employment can be attributed to the influx of migrant labour from the new member and accession states in
Professor Harvey added: ‘Government figures of between 100,000 and 200,000 falsely self-employed and a fiscal loss of £340,000 are gross underestimates. Treasury ministers, however have effectively acknowledged that self-employment is out of control.’
The growth of false self-employment is said to be one of the major causes of the skills gap, with an annual deficit of 20,000 apprentices and trainees. Three quarters of construction companies have no apprentices or trainees in their workforce.
The report, entitled The Evasion Economy was commissioned by UCATT (the Union of Construction, Allied Trades and Technicians) and has been launched this week at the