CIS reform deadline is 'far too ambitious'

The Inland Revenue (IR) will be nowhere near reforming the CIS scheme by its 2005 implementation deadline, according to sources close to the department.

After consultation with the industry ended in June this year, the IR set up three feedback forums (covering advisors, contractors and professionals) to tour the country and get views on its proposals to reform the current system. The forums have just finished a sweep of the South.

However, an insider, who sits on one of the forums, told CJ that forum feedback had "totally surprised officials". A number of industry heavyweights warned the 2005 deadline was far too soon and that no implementation date should be given.

"The industry is just not ready and there is absolutely nothing set out and ready to be produced by the IR, even in a draft form, said the source.

"If the government is looking to introduce these changes in the forthcoming Finance Bill in March, the revisions need to be agreed and ready by October for a draftsman to prepare. We are falling well short of that point."

Proposed changes to CIS include streamlining the registration and verification process by using upgraded computer systems and the introduction of employment status declarations to avoid problems such as bogus self-employment.

The source added that if the IR wants CIS to be online, the software required needs to be commissioned and in place by 2004.

"Again the source claimed this is a date the industry is far from prepared for given its notoriously slow take-up of technology.

"The pressure is really coming from central government and the IR is starting to realise it has bitten off more than it can chew," said the insider.

Construction representatives have also voiced their frustration at the current system that allows gross payments within a certain turnover bracket. These brackets include 30,000 for a sole trader and 60,000 for a partnership.

Current industry feedback is calling for a clean tax payment record and a VAT registration number to be enough to justify a gross payment.

An IR spokesman would not be drawn into detail and would only say that data is being pulled together and that there is "plenty of time" to iron out issues by 2005.