The recent Supreme Court judgment in Autoclenz Ltd v Belcher and Others (UKSC 41) backed a group of self-employed car valets who worked for Autoclenz and argued that clauses in their contracts did not reflect their actual working arrangements. In spite of clauses on mutuality and substitution, the court ruled that they were obliged to provide the services personally. The legal dispute started in 2007.

The Supreme Court decision establishes a precedent that the conduct of the contractual parties could override the written terms.

In its ruling the Court said decided that the contracts did not reflect the true agreement between the parties and that in reality “four essential contractual terms were agreed: (1) that the valeters would perform the services defined in the contract for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) that the valeters would be paid for that work; (3) that the valeters were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and (4) that the valeters must personally do the work and could not provide a substitute to do so.”

This case highlights the importance for all parties to ensure that they have seen the contract of services and agree that it reflects the true working practices of everyone involved. The court stated that only one party needed to claim that a clause in the contract did not reflect their intentions in order for the clause to be considered a sham.

If you have any self employed people contact us today to ensure that your current arrangements reflect this new opinion, on 0800 917 9176

EICG are offering a menu of Construction Industry Scheme (CIS) reviews for your company at special rates until 30 June 2011

HMRC are being very proactive in this area, even for companies that have previously been under the radar. You could be caught out whether this be via an employer compliance review, an employment status review or an in year business records check. The costs of getting things wrong can be monumental, not just the penalties but also the time taken out of your business and the resulting stress that this can cause.

So why wait, choose your review option below and contact us today on0800 9179176 begin_of_the_skype_highlighting 0800 9179176 end_of_the_skype_highlighting

• Employment status review of your subcontractors and associated paperwork
• Review of all aspects of your Construction Industry compliance
• Business record checks
• Full Employer compliance review, as HMRC would conduct them

Make your company the one that HMRC walks away from rather than feasting on your hard earned profits.

The letter will explain that, once the opportunity expires, the tax authorities will begin a clampdown on those working in the sector who have failed to declare earnings and pay the tax they owe.

Under the tax plan, plumbers, gas fitters, heating engineers and members of associated trades who owe tax which they have not yet declared can come forward anytime up to 31 May to tell HMRC they want to take part. If they make a full disclosure, most face a low penalty rate of 10 per cent, with a maximum of 20 per cent. Once they come forward, they have until 31 August to make their disclosure and arrange for payment.

After that date, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.

The Plumbers’ Tax Safe Plan (PTSP) is the first initiative in a campaign focused on tradespeople. It is designed to make it easy for those in the plumbing industry to put their tax affairs in order.

Mike Wells, HMRC’s Director of Risk and Intelligence, said:

“Our aim is to make it easy for plumbers to contact us, make a full disclosure of income and face a reduced penalty.

“We are using a variety of intelligence sources to target plumbers who have not declared their full income and I urge tradespeople in this group who think they owe tax on their income to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.

“The first step for those wishing to avoid a full tax investigation with much higher penalties is to notify us.

“We do not think everyone who receives a letter owes us tax. However, if you owe tax and don’t get a letter, do not assume that HMRC will not catch up with you.”

To join the tax plan people in the plumbing industry must:

* Register with HMRC to “notify” that they plan to make a voluntary tax disclosure by 31 May
* They then have until the 31 August to tell HMRC about tax due and make arrangements to pay any tax interest and penalties due. This is called “making a disclosure”.

Please be aware that before you launch forth with this “offer” from HMRC you should consult a specialist telephone 0800917 9176 begin_of_the_skype_highlighting 0800917 9176 end_of_the_skype_highlighting

In order to maintain the confidentiality of a contractor’s monthly return HMRC have introduced further security checks to ensure that the corrections made are proper to a particular return and that the revised details have been recorded correctly.

What does this mean?

If you telephone the CIS contact centre you may be asked for other details shown on the original return that now requires amendment. You should therefore ensure that you have a copy of the original return before making the phone call.

If you send an amended return to Netherton then you may be contacted by the CIS centre in Newry asking you to confirm the period to which the corrections/additions relate.

If you write a letter to the CIS centre in Newry, once again you may be contacted either by telephone or in writing asking for confirmation of the amendments.

Very quietly HMRC have announced that there is a new CIS penalty regime being brought in.

From October 2011, the penalties for late or non-filing of a contractor’s monthly return within the Construction Industry Scheme are changing.

The first return falling within the new penalty regime will be the return for the month ending 5 November 2011.

The following penalties will apply to that return and all subsequent months’ returns that are not filed or filed late:

• A fixed penalty of £100 immediately a return is late.
• A second, fixed penalty of £200, two months after the filing date if the return is still outstanding.
• If the return is still outstanding six months after the issue of the first penalty, a tax-geared penalty is charged which is the greater of £300 or 5% of the amount of deductions shown on the return.
• If the return is still outstanding twelve months after the issue of the first penalty, a further tax-geared penalty is charged which is the greater of £300 or 5% of the amount of deductions shown on the return. Higher levels of penalty apply where, as a result of the failure to file the return on time, information has been deliberately withheld.

Interest will be chargeable on any penalty paid late.

The legislation for the change is at schedule 55 Finance Act 2009.

Paragraph 13 of Schedule 55 to Finance Act 2009 introduces a penalty capping provision. The fixed penalties within the capping period will not exceed a maximum of £3,000. The capping period starts on the day of commencement (the date the contractor advises HMRC that they will first pay, or have first paid, a subcontractor) until the date they first file a CIS monthly return. Tax-geared penalties of 5% of the amount of deductions shown on the returns will also apply in the capping period where the return is submitted over 6 and 12 months late. There will be no fixed minimum charge of £300 when the capping period applies.

Mistakes can be expensive so contact EICG on 0800 917 9176 to find out about our Construction Industry Scheme (CIS) reviews

A £158BN hole in the public finances means that HMRC are being used to try and raise extra cash for the Treasury, as quickly as possible and that will mean easy targets, so small and medium size firms, anyone in the construction industry are in the direct firing line for:

employer compliance reviews

PAYE/NIC investigations

Employment status reviews

tax investigations

you name it and they are heading your way and don’t think it won’t happen to you – it will, so why not take advantage of the special deal that EICG is running this month on PAYE/NIC healthchecks and Construction Industry reviews, call us today on 0800 917 9176 to see how we can help you avoid being a victim

HMRC announced in June that Extra Statuory Concession B46 (ESC B46) allowing a seven-day grace period for late employers’ and contractors’ returns will cease from 31 March 2011.

ESC B46 established the principle that penalties would not be charged when employers and contractors submitting tax returns and CIS forms had taken “all reasonable steps” to file their returns on time, but were not able to do so due to unforeseen circumstances such as postal delays.

With the advent of online filing, which is required for P35s and P14s and will become mandatory for Corporation Tax returns from 1 April, HMRC considers the concession to be “redundant” because the delays it was intended to address will no longer happen. Returns must therefore reach the department by their due date or incur a late filing penalty of £100.

Confirming the new penalty regime HMRC explained: “Any customers filing a return late will, as now, be able to request us to remove any penalty, if they believe they had a reasonable excuse for the delay in filing. We will consider every case on its own merits. Customers can also appeal against the penalty to a Tribunal.”

HMRC are now out and about big style as they have told their Inspectors to bring in as much money as possible, as quickly as possible, which is not really surprising given the current economic environment.  There will be pressure to settle long running full enquiry cases and Inspectors will be encouraged to take up aspect cases (these are as they sound, looking at a particular aspect of a business, eg employment status, entertaining expenditure etc ) which are likely to be settled more quickly to optimise the tax yield in the current fiscal year.

Interestingly, it would appear that the new “Cross Tax” enquiry framework, involving PAYE/NIC, Corporation Tax, VAT etc is being shelved as it is slowing up the enquiry process so Inspectors will be reverting to just working their particular area