Construction Confederation report says industry cannot bear costs in the long term.
The government’s new construction tax scheme places an “intolerable burden” on the industry and is costing it millions to implement, according to the Construction Confederation.

In a report due to be submitted to the Inland Revenue today, the confederation reveals that CIS24 vouchers, which have to be submitted by some subcontractors to main contractors before payment, are costing firms up to £40 each to process. And many contractors are sent hundreds of these vouchers a week.

Confederation tax expert Liz Bridge, who wrote the report, said it was based on a survey of 2000 members. She asked them how much time and money they spent implementing the Construction Industry Scheme, which finally replaced the 714 system last month.

Bridge said the survey found “horrific compliance costs”, and that the costs were “intolerable in the long term”.

She said one company showed how it took more than an hour to process 10 CIS24 vouchers, which complement the CIS6 registration cards used by contractors with a turnover of less than £5m. “At the wages being paid for accounting staff, it’s costing some companies £40 per voucher to process.”

Bridge has so far received 70 replies. These have shown that, at best, it takes three minutes to process a voucher. “This can still mean five hours’ work a week for many contractors,” she said. This is a big difference from the 714 system where main contractors had no work to do,” she added.

Compliance costs for the CIS6 registration card are also high, said Bridge. She explained that companies are complaining that it takes too much time to race around the country showing their registration cards to customers. “One company said it had spent well over £1000 in the past three months alone on travel costs,” Bridge said.

Bridge hopes to convince the Revenue to abolish the CIS6 and replace it with a reformed CIS5 scheme. Currently, CIS5 registration is only open to firms with an annual turnover of more than £5m. Bridge wants the barrier lowered to £2m. She said that any amendments to the scheme could be made by changing regulations. This would mean that primary legislation would not be required.

It is understood that the Inland Revenue is amenable to the changes proposed by the Construction Confederation. The revenue was unavailable for comment.