Certified Accountants) warns.

The letters advise contractors to carefully check the terms of engagement of their subcontractors. Bob Cope, ACCA Senior Policy Advisor on the Construction Industry Scheme says: “These letters should be taken seriously. The Revenue is aiming to improve compliance within the Scheme and has already doubled the annual

number of monitoring visits it carries out to identify subcontractors

which it believes should be classified as employees.”

ACCA advises that contractors take immediate action to ensure that their house is in order - as there is a real threat that the Revenue

could enforce penalties and the reimbursement of PAYE tax and Class 1 NIC for the employment of any sub-contractors which is

deemed should have been an employee.

Cope added: “There has for a long time been a popular misconception within the industry that holders of CIS 4 cards are automatically selfemployed but this is not the case. The status of each engagement of a sub-contractor by a contractor must be determined by the activities being undertaken and the control imposed.”

Any contractor affected is advised to contact their accountant or read the Inland Revenue’s leaflet ‘IR56 - Employed or self-employed? - which provides basic information about employment

status or tax and NIC.

From April 2006, the current construction industry scheme will undergo a massive overhaul which will see the removal of vouchers and registration cards. These are to be replaced by a verification process requiring the use of the Internet or call centres.

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