CIS system will bring ‘bedlam’ without Revenue compromise

Members of the Joint Taxation Committee (JTC) were due to meet HM Revenue and Customs (HMRC) yesterday (Wednesday) to ask for a compromise on the new CIS system to avoid chaos next spring.

The desperate lobbying is an attempt to force HMRC to realise that CIS will rapidly descend into “bedlam” if it continues to force through an April 2006 introduction date, and insists on immediately applying stringent penalties for any discrepancies or mistakes. Software firms are still unable to test any systems they might have developed against the HMRC site, and are still in dispute about final specifications.

Liz Bridge, the Construction Confederation’s director of taxation, warned that the level of unpreparedness in the industry is “very, very frightening”. She added that some large firms appeared quite relaxed about the change, as they don’t have many subcontractors, but cautioned that all the layers below the main contractor would face problems if the system failed.

Bridge told CJ she knew that some IT firms had told customers that they would have an update ready before the deadline.

“If any firm has software up and running and has checked it with HMRC, I would like to see it. But I have a horrible feeling that firms are producing planning documents rather than real timescales.

For larger firms, it might only take two to three weeks slippage and they’ll end up installing updates across all their offices only an hour before take-off.”

The timescales are so tight, she said, that contractors will have no choice but to buy CIS software from their existing supplier, limiting choice. She also warned that many firms would find CIS updates would probably  work in conjunction only with the latest software packages. “Many firms aren’t good at buying updates, so patching the systems together may be hard.”

Dennis Keeling, chief executive of the Business Application Software Developers Association, said he had an urgent meeting with HMRC on Friday. “We have outstanding issues that have to be addressed before we can do anything more.” 

Bridge added: “There is general misery about not being ready. We have an emergency e-mail survey going out about this, and I suspect the recipients will be like owls who have found the taxidermist’s fingers up their bottom!”