Bogus construction self-employment costing Treasury £5bn per year

The construction union, UCATT, has revealed the enormous amount of money being lost to the Treasury as a result of bogus self-employment, particularly in the construction industry.

Giving evidence to a Government committee earlier this week, Alan Ritchie, general secretary of the union, said that UCATT believed that up to half of all construction industry workers (around one million people) were working as bogus self-employed.

It is unsurprising that so many workers are involved in this tax fiddle. Most self-employed workers operate under the Construction Industry Tax Scheme - 20% tax is deducted at source, they pay lower NI contributions and are entitled to make an annual tax return.

Importantly, as the workers involved are classed as self-employed, their employers do not have to pay any employers national insurance contributions. £2.3bn is lost through this shortfall in NI contributions according to UCATT.

The remainder of the £5 billion is lost through the ability of CIS members being able to make an annual tax return. The cost of travel, tools tax and other expenses are all offset against tax. Many CIS members can also claim a weekly rate for their spouses or partners, for assistance with taking calls and bookkeeping.