TaxCorporate TaxDon’t waste CIS extension, accountants warned

Don't waste CIS extension, accountants warned

Relief as scheme for construction industry gets 12-month delay

Accountants have been warned not to waste the opportunity to clarify their
construction industry clients’ tax status, despite the announcement of a year’s
delay to the start of a new regime.

Widespread relief greeted the Treasury’s decision to delay the introduction
of the revised construction industry scheme by a year to April 2007, but
industry experts have warned accountants to use the extra time to ensure clients
do not fall foul of the procedures.

The new scheme makes fundamental changes to the way contractors and
subcontractors manage their tax and national insurance liabilities, and will
impact on major construction projects such as Wembley stadium.

Alastair Kendrick, a partner in Wilder Coe’s employment tax services
division, said that, although the scheme had ‘sensibly’ been put back, advisers
and contractors would need to ‘tidy up’ the tax status of workers for 2007.

‘There is a risk that those concerned will think “we have got another 12
months”, but accountants still have to consider if clients have the right
status,’ said Kendrick.

‘It is good news ­ but everyone must be ready next time.’

The new scheme has caused outcry among the accounting, construction and
software industries over fears that April 2006 was too soon to implement the new
rules, leading to incorrect tax payments, fines and in the worst cases business
failures. In announcing the delay, financial secretary to the Treasury John
Healey said HMRC would ‘step up its level of advice and compliance activity with
the industry’.

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