Contractors set for struggle to renew tax certificates

A top tax consultant has warned that contractors could face "an uphill battle" in getting their CIS5 or CIS6 tax certificates renewed this year because of inconsistencies in the way local tax inspectors interpret the regulations.

Alan Nolan, a director in KPMG's remuneration group, noted that renewal of the certificates depends on contractors running their business in a proper manner and meeting a turnover test and a compliance test which guarantees that their tax affairs are in order.

He said the Inland Revenue would look favourably on businesses whose failings are considered to be "minor and technical."

He continued: "Under the new scheme, it is now no longer possible to bring tax affairs up to date prior to the date of application. The Inland Revenue needs to be satisfied that the business and those controlling the business can be relied upon to maintain their tax affairs in an orderly manner.

"The main problem is that local inspectors of taxes are split on the interpretation of 'minor and technical.' What an inspector considers not to be 'minor and technical' in, say, Birmingham may not coincide with the views of a counterpart elsewhere in the UK.

"This can result in a large number of contractors being allocated a CIS4 registration card in one area while a company with similar criteria but a different location is granted a CIS5 or CIS6."

Firms who had been refused a certificate should take immediate professional advice and consider an appeal.