Construction industry scheme delay welcomed

PKF accountants and business advisers, welcomes postponement of the Construction Industry Scheme, but call for implementation of the changes affecting non-construction companies.

PKF accountants and business advisers, welcomes postponement of the Construction Industry Scheme, but is calling for immediate implementation of the changes affecting non-construction companies in the proposed regulation.

The proposed exclusion from the new scheme of payments made by charities, PFI joint venture companies and LEA maintained schools, as well as payments made by non-construction businesses for work commissioned on their own properties, should be introduced now to reduce the regulatory burden for organisations outside the construction industry, says PKF.

Mike Evans, partner at PKF, said: "PKF welcomes the news of the postponement of the introduction of the 'New Construction Industry Scheme' to allow time for contractors - especially owner-managed businesses - and HMRC to prepare properly for the changes.

However, we can see little reason for HMRC not to introduce some of the more welcome changes sooner to make life easier for non-construction businesses in the short term".

PKF is also warning contractors not to assume that subcontractors issued with a CIS4 card are automatically self-employed.

Mike Evans said: "Even subcontractors issued with a CIS6 tax exemption certificate are not guaranteed to be accepted as self-employed by HMRC as the precise nature of the engagement with the contractor will determine the correct status in each case.

"Contractors should seek professional advice now to review their subcontractors' status because, when the new rules are introduced in 2007, every contractor will be required on a monthly basis to sign a declaration saying that they have reviewed their subcontractors' status, and that no-one included in that month's return should be treated as an employee rather than paid through the Construction Industry Scheme.".

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