Self employment and CIS

[jomurray]

I am trying to advise a SME in the construction industry that has been investigated by HMRC in relation to self employed workers under the CIS scheme.
They have been threatened with huge fines for claiming that people that work for them (about 20 at the most, but this obviously changes from week to week) are not self employed as they do not provide their own materials, etc.
Basically, if large fines are imposed their only option is to go bust. This will mean that the HMRC get nothing anyway.
I have been advising them that there may be other ways of dealing with this, but can't find any records or case law from other companies that have been fined/prosecuted by HMRC, or what level of repayment was involved.

Obviously, mistakes have been made, I am just a little concerned that this is turning into a witchhunt and would like to give them some positive input.

can anyone help?

 

[David Griffiths]

The company needs specialist help with this in view of the amounts involved. It's not the sort of thing that you are going to sort out by asking questions on forums because so much depends on the detail

 

[jomurray]

Hi David,

I'm not expecting to sort out the problem, I am really trying to give them some positives to try to divert their only mindset at the moment, which is to go bust!
The HMRC have been telling Construction Industry that they will clamp down on people who do not follow the rules on self employment, but I can't find any caselaw of companies who have been recently fined or procecuted.
My professional mind is telling me that winding up a business in order to escape a legal tax bill is ethically wrong, and I really want to try to open their mind to a different course of action.

 

[Williams lester]

Do some background reading on Castle Construction SpC723 and Littlewood (JL Windows) SpC 733.