Tax reform deadline nears

Industry stakeholders have just two weeks to submit their comments on the Inland Revenue's (IR) proposals for reforming construction's CIS tax scheme.

Although the closing date for submissions is not until the end of this month, the leading players among both employers and the unions are holding on to their responses until the last minute.

An IR consultation document was published in November. Its main proposals are:

n To replace the CIS4 registration cards and CIS5 and CIS6 gross payment certificates with a verification service.

n To introduce a new employment status declaration.

n To replace vouchers in the current scheme with periodic returns.

n To replace the present IR computer system with a new one capable of supporting the use of e-services, such as communication over the Internet, and allowing the IR to ensure compliance with the scheme.

The IR claims its proposals should lead to considerable savings for many in the industry by reducing the administrative burden. In particular, it points to the removal of the need to travel to present CIS4 cards and CIS6 payment certificates.

It is also claimed that the new computer system will enable the IR to tackle non-compliance more quickly and effectively. Under the verification process, contractors will be responsible for verifying each of their subcontractors.

The employment status declaration will confirm that contractors have considered the employment status of the subcontractors they are taking on. It is suggested that this will represent an important step towards dealing with concerns about false self-employment.

The IR said it does not believe that it would be appropriate - as some have suggested - to shift all CIS4 holders on to PAYE. This is because employment status is an issue that impacts on all industries and "it would be wrong to look at it in isolation in construction".

The consultation document can be accessed at www.inlandrevenue.gov.uk/consultnew.