The Inland Revenue has sent out 15,000 letters to construction companies in a renewed tax crackdown on contractors.

The letters warn contractors to check their terms of engagement with subcontractors to ensure they are accurately classified as employed or self-employed. The Inland Revenue has doubled the annual number of visits to identify wrongly classified subcontractors.

Association of Chartered Certified Accountants senior policy adviser Bob Cope warned that the sending of the letters showed a serious attempt to ensure compliance with the CIS tax scheme.

He said: “These letters should be taken seriously. ACCA advises that contractors take immediate action to ensure that their house is in order.”

Cope added: “There has for a long time been a popular misconception within the industry that holders of CIS 4 cards are automatically self-employed but this is not the case.”

ACCA said that there was a threat that the Revenue could enforce penalties and the reimbursement of PAYE tax and Class 1 National Insurance contributions.