Confederation tax expert Liz Bridge said the Construction Industry Scheme voucher CIS24, which some contractors fill in to show earnings, was unworkable. She said the confederation wanted the CIS24 removed.
Bridge said that only one in three of these vouchers was being filled in correctly because the procedure was too complicated. The voucher is used by contractors that hold the CIS6 registration card. Bridge added that abandoning CIS24 vouchers implied the cancellation of CIS6 registration. “We are recommending to the Revenue that all CIS6 holders become CIS5 holders,” she said.
Problems with the vouchers meant that contractors and subcontractors were not getting paid, said Bridge. “People are scared of paying subcontractors because of penalties if they do not get the paperwork right. The Revenue has threatened £3000 fines if it is done wrong,” she said.
Bridge said the Revenue had now agreed that the fines would apply only if the forms were filled out wrongly in an attempt to defraud the Revenue. “If it is done innocently, then the fine will not apply,” said Bridge.
The scheme was due to come into force on 1 August but contractors negotiated an opt-out until 5 November. It replaces the 714 tax system.
John Huxtable, chief executive of Confederation of Construction Specialists, said that the scheme was proving to be more expensive to administer than the 714 system. “We are currently surveying companies to find out just how much and then we will talk to the Revenue,” he said.
One subcontractor said: “We're not getting paid. Contractors are using the scheme to delay payment. Our cash flow is even more seriously reduced. We can't maintain our business.
“Will the Revenue compensate us for loss of business?”
The Inland Revenue was unavailable for comment.
