Tax & Accounting News

Construction Industry Scheme – The Nonsense Continues

19/02/2008

Further to our earlier article on construction industry subcontractors threatened with loss of gross payment status as a result of minor infringements, we hear that these are not isolated instances.

The new automated CIS review system is picking up instances of minor underpayments of tax (of a few pounds) which were so low that they were not immediately collected under the self-assessment system, but carried forward (with HM Revenue and Customs’ approval) to the next self-assessment due date. However, the CIS system does not recognise such common-sense arrangements, and treats them as infringements, which can have serious consequences for subcontractors.

The moral for subcontractors is to pay any correct outstanding tax balance, no matter how small, and to retain any paperwork from HMRC which indicates that a small balance can be carried forward. As one HMRC hand doesn’t know what the other is doing, this may be required as evidence in an appeal against loss of gross payment status!

Despite all the government’s assurances about wanting to help industry by removing red tape and reducing administrative burdens, it seems that in the real world the opposite is actually happening – companies are being prevented from operating because of minor administrative infringements! How can this possibly help business, employment or the economy?

 

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