Revenue faces cold shoulder over CIS

Industry officials are believed to be seriously considering walking away from future consultations with the Inland Revenue (IR) on the Construction Industry Scheme (CIS).

Sources from the Construction Confederation, National Federation of Builders and Federation of Small Businesses have told CJ that they are prepared to halt further talks following the recent "very disappointing" decision by IR to reject the industry's calls for an alternative to the turnover test.

The decision, which forms part of draft legislation published last week, means that only companies with a turnover of £30,000 are allowed gross payment certificates to compensate for CIS deductions.

The industry had asked for an abandonment of the turnover test in favour of gross certificates being given to VAT registered companies which have a clean tax record.

CJ has also learnt that the industry is furious that the IR's original intention for an 'electronic date interfacing system' - which would have allowed companies to submit tax data online to avoid time consuming form filling - has been excluded from the draft legislation.

"We never expected the full details of the electronic system to be in the draft document but we would have expected at least a brief mention of its implementation," said one source.

"The industry has spent months of hard work and time with the Inland Revenue trying to get its point across. What's the point in consulting with the department when it only seem to consult with itself?"

Another insider told CJ: "We thought we had got on well with Revenue officials. However, I think civil servants and officials nearer the top seem to be whistling a different tune and decided the consultation process had gone far enough.

"One positive outcome from this is that the industry has worked well together for a common goal. What this does mean though is that if one group walks away from talks the whole industry will pull out," he added.

Industry officials will decide on the next course of action when it sits down to go through the draft legislation with IR officials in the next two weeks.

The completed legislation is expected to be ready for inclusion in the Finance Bill in March.