Onus on contractors to clarify CIS muddle

The Major Contractors Group (MCG) and the Construction Confederation (CC) have given a cautious welcome to the Inland Revenue's (IR) consultation document on reforming CIS tax.

The 30-page document, which is now available on the IR's website, formed part of the Chancellor's pre-Budget statement last week. It sets out a series of reforms to streamline registration and verification processes by using upgraded computer systems. It also calls for the introduction of employment status declarations to avoid issues such as bogus self-employment.

UCATT general secretary George Brumwell described the points as "very positive".

However, the proposals, which require an industry response by 28 February next year, put responsibility on contractors to keep the government up to speed on their supply chain.

The CC's head of tax, Liz Bridge, questioned how the department would monitor the system, although she agreed that any company not up to speed with the IR's drive to encourage online reporting "should be left dead in the water".

The proposals are broken down into four parts: registration; verification; return of information and payment; and the end-of-year return process.

Once registered, subcontractors will no longer receive CIS 4 cards or Gross Payment Certificates (CIS 6/CIS 5). This, the IR claims, will reduce the burden on subcontractors having to travel to present documentation to contractors.

Main contractors will be expected to access IR records online, by phone or in writing, when needing to verify the National Insurance number and employment status of subcontractors.

Those found to have taken on subcontractors whose employment status has not been verified will receive substantial fines. The IR pledged to give an "immediate response" to all queries about subcontractors' employment status.

MCG director Bill Tallis said that there were questions over the proposals' "practicality".