NEW CIS – What's It All About?
For those of you affected, you will by now be aware that the New CIS came into effect on 6th April 2007. If you can believe it, the new rules were set out as long ago as 2004, but there are still complaints that HMRC have not given people enough time to prepare for the new system.
The overall objective is to make life easier for contractors and sub-contractors; by removing the need to look at gross payment certificates as long as sub-contractors can be "verified" or have been paid gross in the past two years. But any change of rules comes with many dangers of getting it wrong – in particular, contractors will be required to make monthly returns of payments, including nil returns where no payments have been made.
There is also a new declaration that none of the payments made to sub-contractors are under a contract of employment. HMRC say that the declaration means the contractor has to think about it – if you make an honest assessment and it turns out to be wrong, you won't be penalised. But if you don't think about it at all, you could be in trouble for signing the declaration. HMRC have been trying to tighten up employment status in the construction industry for years, and this is their latest attempt.
If you are affected by CIS, or you think you might be – for example, if you spend £1m each year on building work – we will be happy to advise you on the new rules.
Don't forget to look up our New CIS Newsletter for all the details on the new system and how it will affect you, along with useful resources and information.
The overall objective is to make life easier for contractors and sub-contractors; by removing the need to look at gross payment certificates as long as sub-contractors can be "verified" or have been paid gross in the past two years. But any change of rules comes with many dangers of getting it wrong – in particular, contractors will be required to make monthly returns of payments, including nil returns where no payments have been made.
There is also a new declaration that none of the payments made to sub-contractors are under a contract of employment. HMRC say that the declaration means the contractor has to think about it – if you make an honest assessment and it turns out to be wrong, you won't be penalised. But if you don't think about it at all, you could be in trouble for signing the declaration. HMRC have been trying to tighten up employment status in the construction industry for years, and this is their latest attempt.
If you are affected by CIS, or you think you might be – for example, if you spend £1m each year on building work – we will be happy to advise you on the new rules.
Don't forget to look up our New CIS Newsletter for all the details on the new system and how it will affect you, along with useful resources and information.
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