John Healey MP, Financial Secretary to the Treasury, said: "The introduction of the helpline and the on-line employment status tool are important steps in gearing business for the new CIS. They will provide a comprehensive service for businesses needing to find out about the changes to the scheme and to help them determine employment status."
The employment status indicator is an interactive tool which helps determine the status of those engaged by customers to find out whether they are employed or self-employed.
Status indicator
The ESI claims that a worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice, but depends on the terms and conditions of the relevant engagement.
It says that 'recent court cases indicate there is no single satisfactory test governing the question whether a person is an employee or self-employed. One must consider all the factors that are present in, or absent from, a particular case; weigh those pointing to employment against those pointing to self-employment; and then stand back and consider the picture that emerges'.
The indicators lists a number of factors which it admits is not an exhaustive list but does include the more important ones. These include (with extracts from the ESI):
The document concludes by adding that as far as employment rights and benefits entitlement are concerned: t'he fact that a person is found to be an employee for tax and, or NICs purposes does not necessarily lead to the conclusion that he or she is an employee for other purposes'.
CIS scheme
The new construction industry scheme will be introduced from April 2007, twelve months later than originally intended.
The new CIS will result in two main changes. At present, the identification card or certificate held by the subcontractor must be presented to the contractor before a contract is entered into under the provisions of the current scheme. These cards and certificates are being replaced by a new verification service requiring the contractor to establish the tax payment status of the subcontractor before making any payments under the new scheme.
Contractors' existing practise of using vouchers to account for payments and tax deducted under the current scheme will be replaced by monthly returns. The monthly return contains a declaration that the contractor is satisfied that the payments included in the return are not made under a contract of employment.
The new scheme will apply to around 200,000 registered contractors and 900,000 subcontractors.
HMRC had previously launched the status indicator last year but had warned that it was not suitable for 'individuals who provide their services through a limited company (known as IR35). (See: New HMRC status indicator - but not IR35 - Shout99, December 2005).
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy.
-
Susie Hughes
The Editor © Hardhatter 2006