Crackdown on 'tax cheat' builders in London

The government has announced a crackdown on what it calls “tax cheats” in London’s construction industry as part of the government’s £917m plan to reduce tax evasion.

HM Revenue and Customs said it was launching a number of “taskforces” designed to tackle people evading tax, including a specific team targeting builders in the capital, which it expected to bring in £3m in unpaid tax.

HMRC said specialist teams visit traders in high-risk sectors to examine their records and carry out other investigations. The move is part of a wider crackdown on tax evasion which the government says will bring in £7bn a year by 2014/15.

David Gauke, exchequer secretary to the Treasury, said:“We are determined to support hardworking people who want to get on, but the people being targeted by these taskforces have no intention of playing by the rules. This Government has made it clear that we will not tolerate tax evasion and we have provided HMRC with the resources to crack down on those who break the rules.”

The crackdown comes as Labour’s shadow chief secretary to the Treasury Rachel Reeves announced that a future Labour government would act immediately to tackle so-called “bogus self employment” on construction sites.

Reeves said that if elected Labour would introduce rules to ensure that construction workers were automatically treated as employed directly by contractors if there were “obvious signs” that they were directly employed.

Reeves said bogus self employment, where individual workers set up as private companies in order to avoid income tax, affected 300,000 construction workers and cost the Treasury £350m a year.

Reeves said: “We cannot afford to leave loopholes in the tax system that allow vital revenue to be lost. It is unfair on the majority who do the right thing play and by the rules if some are able to avoid paying their fair share of tax.

“We will of course consult further and work closely with the construction industry to design the criteria so that the right level of flexibility is maintained, that those who are genuinely self-employed are not hit, and that measures do not impact negatively on a sector that has been hit hard by the slump in infrastructure and housing investment we have seen under this government.