Bosses are stealing millions of pounds from construction workers’ national insurance contributions and taxes.
In one case, a crooked construction boss has ended up in jail.
Amarjit Singh Sidhu and two others have been jailed for a total of seven and a half years. Two others involved in the same scam were given suspended sentences.
They stole a total of £771,000 in income tax, national insurance and VAT.
Singh is boss of Slough labour supply firm Multiple Construction Limited, which, according to the Revenue and Customs department, supplied workers to “a number of construction companies, whose contracts involved the construction of Wembley Stadium, Canary Wharf and White City”.
In April 2004 all employees were transferred to the sham company Tempaid Limited, which had been set up to evade tax.
Multiple Construction would issue cheques for payment of false invoices to Tempaid. The funds were then withdrawn and used to pay wages in cash.
Of Multiple Construction’s 200 employees, only 87 were recorded with legitimate national insurance numbers.
The case is an insight into the reality of the scams involved in the subcontracting system.
A contrived chain of companies is set up that claim to subcontract labour for the construction industry, with the intention of disappearing before paying any taxes.
This is possible because of the government’s Construction Industry Scheme, which allows contractors to make payments for workers to a subcontractor without accounting for the tax due.
The subcontractor then becomes liable to pay the tax and the VAT element of the money they have received.
If the subcontractor contracts out the work to a second subcontractor, and one goes missing, the money is gone.
It is no surprise that there was an attempt to use gang labour supplied by Tempaid to scab on the Wembley stadium strike in 2004.
A Wembley striker told Socialist Worker, “We arranged for translators to counter what the gangmasters were telling these workers.
“It meant that they refused to scab and the strike stayed solid.
“It’s a shame we couldn’t get them proper conditions. But at least the courts have caught up with the crooks.
“Gangsters are rife in the industry. It suits the bosses to use the subcontractors to divide workers and run down wages regardless of whether it is legal or not.”