If you have had a letter from the Inland Revenue about the CIS labour-only sub-contractors you use being employees this year, you are not alone. The Revenue posted letters to 57,000 contractors and sub-contractors warning them of the tax and National Insurance contributions they could owe if subbies turn out to be employees, as defined by the revenue.

What is the definition? Essentially, if a person works only or largely for you and does not provide their own tools and other essentials (such as safety clothing) to perform a job, they are likely to be considered employees.

Jonathan Manduell, tax partner and member of the Property Sector Division of national accountancy group UHY Hacker Young, says: "Contractors could find they owe a fortune in unpaid tax, national insurance, interest and penalties. The Inland Revenue is targeting those businesses where, from their records, they have doubts about the employment status of sub-contractors, so anyone who gets the letter should seek advice as quickly as possible to avoid hefty fines."