HMRC’s construction industry investigations collect a further £154m

According to recent reports, HMRC recorded a 17 per cent increase in tax takings from the construction industry in the 12 months to 31st March 2015.

The figure means that the UK’s tax authority has managed to double its takings from the sector over the course of the last five years.

Self-employed construction workers, who are typically paid on a “cash in hand” basis, as well as self-employed contractors and sub-contractors, have formed part of HMRC’s focus.

The Government body has emphasised once again that self-employed workers must have a sub-contractor certificate and if they do not possess one then contractors should subtract tax from the payments that are made.

Any individuals that work through an intermediary – such as an agency – are also being reminded that they must be paid in line with PAYE requirements, rather than being classed as self-employed.

Construction firms that contract self-employed workers are usually more likely to lack the formal paperwork and evidence required by HMRC to prove that the individual is in fact self-employed.

If a company cannot produce the correct paperwork when required to do so there is a chance that they could face paying six years’ worth of PAYE and National Insurance contributions, in addition to any interest.

Up to 100 per cent of the tax could also be charged again via further penalties.

Paperwork errors are a constant risk for the construction industry, primarily because there are many more self-employed workers and sub-contractors when compared to most other industries, and many of these often change jobs frequently throughout the year.