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editor's comment:CIS: no April fool for construction
21:00 26 Oct 2005
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CIS: no April fool for construction
It's good news that HM Customs and Revenue has delayed introducing the new Construction Industry Scheme (CIS) until April 2007. It's welcomed by everyone who campaigned against the April 2006 introduction date.
Given the government's somewhat rocky record on IT projects - many highlighted by CJ's sister title, Computer Weekly - it hardly seemed plausible that HMRC would be able to ensure its CIS system was up and running by April.
It would seem a victory for common sense all round. But there is a sting in the tail - for some. While gearing up for the April 2006 start date, HMRC has doubled its compliance team, and it's also reorganising its construction unit to strengthen its compliance capability.
That means one thing; companies are now more likely to have a visit from HMRC to investigate their status and that of their subcontractors, as well as a host of other tax matters. And as a large number of firms are expected to renew their CIS certificate in August 2006 - six years on from the introduction of the current CIS - many will be under close scrutiny.
Some might argue that accountants are over-egging the potential damage, but losing the ability to pay gross would be a huge problem for many companies. Firms who are fiddling the system and winning work at the expense of those who are sticking to the rules should be worried. And in an ideal world, law-abiding contractors who are doing everything to the letter should have little to worry about. But there is sometimes no predicting what an investigation can unearth, even in the best of firms.
Even though the new CIS has been delayed for a year, the message from HMRC seems blatantly clear: get your tax affairs in order now, or run the risk of losing your gross payment status. This year could be the start of a level playing field for UK Construction plc, but for some it could be a rocky path to a dead-end in business.
It's good news that HM Customs and Revenue has delayed introducing the new Construction Industry Scheme (CIS) until April 2007. It's welcomed by everyone who campaigned against the April 2006 introduction date.
Given the government's somewhat rocky record on IT projects - many highlighted by CJ's sister title, Computer Weekly - it hardly seemed plausible that HMRC would be able to ensure its CIS system was up and running by April.
It would seem a victory for common sense all round. But there is a sting in the tail - for some. While gearing up for the April 2006 start date, HMRC has doubled its compliance team, and it's also reorganising its construction unit to strengthen its compliance capability.
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That means one thing; companies are now more likely to have a visit from HMRC to investigate their status and that of their subcontractors, as well as a host of other tax matters. And as a large number of firms are expected to renew their CIS certificate in August 2006 - six years on from the introduction of the current CIS - many will be under close scrutiny.
Some might argue that accountants are over-egging the potential damage, but losing the ability to pay gross would be a huge problem for many companies. Firms who are fiddling the system and winning work at the expense of those who are sticking to the rules should be worried. And in an ideal world, law-abiding contractors who are doing everything to the letter should have little to worry about. But there is sometimes no predicting what an investigation can unearth, even in the best of firms.
Even though the new CIS has been delayed for a year, the message from HMRC seems blatantly clear: get your tax affairs in order now, or run the risk of losing your gross payment status. This year could be the start of a level playing field for UK Construction plc, but for some it could be a rocky path to a dead-end in business.
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