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Constructors 'self-employed' scam

A drive to cut Olympic construction costs is threatening to suck in large numbers of “bogus self-employed” migrant workers, leading to widespread tax avoidance and blocked work opportunities for local people, ministers have been warned.

Alan Ritchie, general secretary of UCATT, the construction union, has written to Jane Kennedy, financial secretary to the treasury, and Paul Gray, chairman of Revenue & Customs, warning that a decision by the Olympic Delivery Authority to allow contractors to recruit self-employed workers would encourage tax abuses and reduce site safety.

More than 10,000 construction workers are likely to be engaged in Olympic projects at the height of development, according to the union, which wants the authority to ban the use of self-employed workers.Mr Ritchie, said: “There is a growing fear that the ODA and the major Olympic contractors are trying to build the Olympics on the cheap, by employing large numbers of migrants workers on self-employed contracts [and] paying them far less than they would have to pay British employees.” One of the legacy aims of London’s bid to host the 2012 Olympics was “to inject skills into local workers living in the deprived London boroughs”, said Mr Ritchie. “This will not occur if contractors are allowed to use bogus self-employment...Companies using bogus self-employment are highly unlikely to train apprentices.”

The union says that the industry’s self-employment tax scheme is habitually abused, with companies registering workers as self-employed when they really should be classed as directly employed. As a result, contractors did not have to pay national insurance, holiday and sick pay, and pension contributions. Workers are not covered by employment rights, it says. UCATT says: “It is a well-known fact that hundreds of thousands of building workers, who work for one employee, often for years, are treated as self-employed when all the tests established by the...Revenue show that they should be considered to be company employees.”

The ODA denied talks with the union were deadlocked. It said: “We are committed to ensuring high standards of employment and are currently in positive negotiations with construction unions to finalise a memorandum of agreement. The principles have been mostly agreed and we hope the final points will be resolved in the coming weeks. It is our intention that the memorandum will include an agreement on maximising direct employment.”

From: Tax warning over Olympics workers, Andrew Taylor, FT, July 8 2007

More at: Self employed scam

See also: Rogue Gangmasters

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