Contractors are being warned to carefully scrutinize the construction industry scheme (CIS) announced in the recent pre-Budget report.
Carol Barrie, tax partner at RSM Bentley Jennison, says most sub-contractors rely very heavily on their CIS gross payment certificate but that certificate can be removed if the sub-contractor’s taxation affairs are not in order.
She said any failures during the 12 month review period will mean that HM Revenue & Customs (HMRC) will write to that contractor and tell them their gross payment status is to be withdrawn. Some of the failures include if HMRC has received:
n your contractor monthly return (including a nil return) late on four or more occasions;
n one of your contractor monthly returns more than 28 days late;
n your CIS/PAYE deductions late on four or more occasions;
n one of your payments of PAYE/CIS deductions more than 14 days late;
n one payment of your Self Assessment tax more than 28 days late;
n one payment of your Corporation Tax more than 28 days late.
In the pre-Budget report briefing notes, it was announced that: “HMRC will provide a new service for businesses in temporary financial difficulty and unable to pay their tax bills to spread payment of their bills over a timetable they can afford. The service will cover all taxes paid by business.”
Mrs Barrie added: “HMRC must understand that allowing taxpayers under real financial pressure to pay their tax over a timetable they can afford will be of no benefit whatsoever if that action results in them losing their gross payment status for 12 months; they will simply go out of business.
“If on the other hand, they are treated as compliant, provided they adhere to any schedule of payments agreed with HMRC then this could be a valuable ‘double lifeline’ to an already hard pressed construction industry.”