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False self employment: Falling on deaf ears

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Posted by RebeccaBenneyworth in Tax, In business on Mon, 15/03/2010 - 08:00

• The summary of responses on the consultation on false self employment in the construction industry has been published
• This makes somewhat depressing reading
• The government clearly intends to press ahead with the proposals, irrespective of the responses

The responses to the consultation on false self employment in the construction industry have been published, together with comments on how government policy has changed as a result of the consultation.

However, there are several aspects on which the government is unmoved:

• Legislation giving effect to a special test to determine status for PAYE and NIC purposes in the construction sector will definitely be brought forward
• The fact that these rules may apply to workers who are not regarded as employees for employment purposes is of little interest – so no protection under employment law is to be offered to workers affected by the new "categorisation"
• The three tests set out represent a good start to the categorisation of workers, and will form the basis of the new legislation

So what changes were made as a result of the consultation? Well, it would seem that the government agrees with respondents that the construction sector has been particularly badly affected by the recession, and therefore accepts that the new legislation should not commence until after the sector shows signs of a clear recovery. One would also assume that this will allow time for the Olympic stadia and other resources needed in London in 2012 to be contracted before the sector 'downs tools' in protest.

There is also some scope for potential modifications to the tests originally proposed, possibly by the inclusion of one or two additional tests, but more likely by the inclusion of clear guidance. The document indicates that the government is still open to modifying the tests slightly, but wants to keep the tests to a minimum, and each test must stand alone as a clear indication of self employment. It is possible that VAT registration may form another test but this is not certain at present.

I did find reading the summary of responses somewhat depressing. It reads as an 'old-style' consultation – we are going to do this anyway, so here is a chance to have a moan about it. Each section lists out respondents' views, and then 'the government's response' which could be paraphrased as "yes, but we are doing it anyway" in relation to almost every response.

Or am I having a bad day?