 Prepare now for smooth transition to CIS 2007
07 February 2007: With the introduction of the new Construction Industry Scheme (CIS) this April, builders and those involved in the construction sector not wanting to fall foul of HM Revenue & Customs (HMRC) need to prepare now or risk the prospect of a lengthy and costly tax investigation.That’s the view of Brian Lovie, Director of Employment Taxes at PKF Accountants & business advisers, who believes that investing a little time now will avoid untold problems later on. A CIS scheme has been in place since 1972 and was introduced to help deal with problems, which were endemic in the industry, of engaging workers on a ‘cash in hand’ basis. The current CIS has been in place since 1999 but retains the basic structure of its predecessor which relies on paper vouchers to evidence payments between contractors and subcontractors. It suffered problems because of this and the new scheme is being brought into place this April as a result.
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 | Brian said: “Most contractors and subcontractors will be affected. Those who fail to change the way they operate are basically drawing attention to themselves. The last thing that anybody wants is to become subject to an enquiry by HM Revenue and Customs because it is a fraught and very worrying process which can be intrusive, time-consuming and costly. |
“While the new CIS regulations may be an irritating distraction, I believe that the revised scheme will reduce the regulatory burden on the construction industry, improve the level of compliance by construction businesses with their tax obligations and finally help construction businesses get the employment status of their workers right.”One of the main changes being brought into force is the submission of monthly returns showing to whom payments have been made, the amount paid and the amount of materials used on a job, where as previously this was required on an annual basis. The monthly return will also act as a declaration that the builder considers the subcontractor to be self-employed. Failure to provide monthly returns will result in penalties for late submission based on the number of subcontractors on it. Brian added: “Of all the new regulations this new rule will probably have the biggest impact as not only will it be a monthly administration burden but the penalties for getting it wrong or late could be costly. “Our advice to those in the construction industry is to get expert help from a firm like PKF which can guide them through the various changes in the CIS.” -ends- Further information:
Jason Gowar, PR Manager Tel: 0207 065 0573, jason.gowar@uk.pkf.com
Jane Murray, PR Executive Tel: 0207 065 0135, jane.murray@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is one of the UK’s leading firms of accountants and business advisers and specialises in advising the management of developing private and public businesses. The firm has more than 1,500 partners and staff operating in 23 offices around the country. Principal services include assurance and advisory; consultancy; corporate finance; corporate recovery and insolvency; forensic; and taxation. The firm has particular expertise in advising sectors such as small and medium-sized companies; charities; hotels and leisure; medical; professional partnerships; public sector; property and construction; and technology. The firm’s web site is www.pkf.co.uk.
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited.
3. PKF (UK) LLP is a member of PKF International, which has more 12,800 people operating in over 100 countries around the world.
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