The Electrical Contractors'Association (ECA) warns that its members will suffer because of HM Revenue and Customs' (HMRC) decision to stick to the planned April 2006 launch of the new electronic version of the Construction Industry Scheme (CIS).
The ECA fears that bringing in the new electronic scheme without allowing time for adequate software development will create turbulence in the entire payment chain,putting undue pressure onto the electrical industry, and in particular to small and medium-sized firms.
In a recent letter to John Healey, HM Treasury Financial Secretary, ECA Director David Pollock said that more time was needed for operational software to be manufactured, installed by contracting companies, and their staff trained in its use. He also called for better information about the scheme in general,so that ECA members could be properly advised. He suggested a phased implementation of the new scheme, which could start on the original date of April 2006. David Pollock said: "HMRC is exerting pressure on the industry to comply with CIS but it is not allowing enough time for the new scheme to be introduced properly. We believe that if the start date of April 2006 were to be maintained, there would be problems resulting in late payments to our members, putting cash flow under significant pressure, particularly for the smaller and medium sized companies.
“Irrespective of how the electronic scheme is introduced,”continued Pollock, “contractors and subcontractors are already being put under pressure by HMRC, who are taking a hard line on the present Compliance Test.
They are citing minor and technical failures as reasons not to renew Gross Payment Certificates. As a result, companies are being forced to appeal to the Appeals Commissioners. These appeals have generally been successful, but time has been wasted and costs incurred."
