There are growing fears that the strict timetable for the revised Construction Industry Scheme - which comes into effect next April - will
place significant burdens on business.
ACCA (the Association of Chartered Certified Accountants) warns that contractors could have less than six months to amend their
systems for one of the key deadlines - and that they could face penalties of up to £3,000 if they fail to be up to speed with the new
scheme’s launch in twelve months time.
The Inland Revenue is consulting with professional accountancy bodies and construction industry representatives to help develop the
new scheme, but as things stand it could present problems for many smaller businesses as it is heavily reliant on information
technology. ACCA also queries whether, given the current lack of specifications as to how the scheme will operate, the Revenue and the
construction industry will be able to deliver a new workable state-of-the-art system within the tight timescale.
Key issues include:
• IT Infrastructure - given the current problems being experienced with on-line filing, ACCA has concerns over the Revenue’s capacity
to fully develop and test the IT infrastructure to support the new CIS scheme from April 2006.
• Status - the new scheme will place significant burdens on both the contractor and the sub-contractor in identifying whether the
work being undertaken is that of self-employment rather than employment, on each contract - regardless of size.
• Verification - contractors will be required to verify that any sub-contractor engaged is registered within CIS, either by telephoning
or by using the internet. Failure to action this will result in difficulties on making a payment for the work undertaken and completing
the monthly return.
• Monthly returns - contractors will be required to submit monthly returns detailing payments made to sub-contractors in that month
and signing a declaration confirming that the engagement status of sub-contractors is that of self-employment. An error in a
monthly return could result in a fine of up to £3,000.
Bob Cope, ACCA’s Senior Policy Advisor on the Construction Industry Scheme, said: “It is our understanding that the timescale for
notifying contractors of the detail is October 2005. This leaves businesses very little time to implement procedural changes to
administration tasks and then to fully test the end to end process.”
