A third draft of the secondary legislation for the reformed Construction Industry Scheme has been published. The changes from the second draft are generally points of clarification but the following amendments are worth noting:

• The Regulations already set out the requirement for a contractor to submit a return to the Inland Revenue within 14 days of the end of each tax month. This statutory return details the payments made to subcontractors during the tax month, including details of payment made under deduction of tax. In addition, if the subcontractor is registered for payment under deduction, the contractor must give the equivalent information to the subcontractor, again within 14 days of the end of each tax month. The contractor now has the choice of giving the subcontractor one document each month that summarises all of the payment made in the tax month, or a document for each of the contract payments made during the month.
  
  
• A new Regulation has been added that excludes from the reporting requirements any contract payments that have been made under a Private Funding Initiative by a contractor that is a public body.
  
  
• For a subcontractor to be registered for gross payments, one of the tests that must be met is the turnover test. The sole trader, firm or company applying for registration must provide evidence, the nature of which is set out in the Regulations. Where a new business does not have the turnover to meet the test, the Regulations set out an alternative test. This alternative test does not now apply to sole traders. The effect is that a new sole trader is not required to meet a turnover test.

Further comments on the latest draft Regulations are invited and should be received by 14 January 2005.

Discuss this news item in the PayPerShop Forum

...back to 10 December 2004

Sources:
www.inlandrevenue.gov.uk/cis/index-c-tax-reform.htm
www.inlandrevenue.gov.uk/cis/cis_regs.pdf
www.inlandrevenue.gov.uk/cis/regs-changes_2-3.pdf