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New CIS Rules from 6th April 2007
Newsletter issue - March 07.
The long awaited new rules for the Construction Industry are now nearly here and all Contractors and Sub Contractors need to be familiar with them. There's more responsibility, more administration and more risk of being attacked by the Taxman.
Under the new scheme...
- Cards and certificates are being replaced by a 'verification' service to confirm whether subcontractors should be paid gross or net. Where paid net, the rate of deduction is increasing from 18% to 20%. For any workers who are unregistered, there is a new higher rate of deduction of 30%, so it's important for all Sub Contractors to get themselves registered. With the influx of foreign workers, there are now CIS factsheets available from HRMC in twelve other languages which may be useful to provide to the relevant Sub Contractors.
- Instead of issuing vouchers, contractors will make monthly returns and issue pay statements.
- The monthly return will include a declaration that the contractor has considered the status of the workers on the return and that none of them is an employee.
It is Contractors who will face the big changes, with even more emphasis on getting the employment status of their workers correct. Having to reclassify workers will be very expensive in terms of National Insurance and other employee rights such as holiday pay. Subcontractors who want to remain self-employed would do well to consider what they can do to help maintain this status and we can help advise on what is necessary.
The new CIS scheme brings with it a wide range of penalties for non-compliance, especially in relation to getting returns in on time and wrong.
New CIS software is also now on the market to assist with the increased administration and we can advise on this.
Guidance on the operation of the scheme is available at http://www.hmrc.gov.uk/new-cis/new_guidance.htm but please contact us for more practical advice and assistance in your own circumstances.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
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