More changes to 714 tax plan

The Inland Revenue has announced more amendments to the new construction industry tax scheme which comes into operation from 1 August 1999.

A new concession will allow partnerships and companies to calculate the multiple turnover threshold allowing gross payment on the basis of the number of partners or directors and shareholders in the last six months of the turnover test period, where that is beneficial.

Liz Bridge, chief taxation adviser to the Construction Confederation, explained: "A lot of companies have non-active shareholders and partners. They need to look at their company structure. The message is that, if they wish to reduce the multiplier effect of the threshold rules, then they should act now to clear out any deadwood."

As announced earlier, a further concession is that all construction turnover will now be allowed to count for all the turnover tests. That is, the tests will not be confined to payments from other contractors.

The Revenue has further revised the guidelines which determine whether a subcontractor company will qualify for a CIS5 certificate or CIS6 certificate (formerly known as 714C and 714P certificates) under the new scheme.

Although the CIS5 certificate is easier to use, since it does not have to be presented personally to the contractor, it poses a greater security risk. Thus, CIS5 certificates will only be given to companies which "have a very good tax history and can demonstrate a genuine need to hold one."