Industry gives mixed reception to the chancellor's changes to the tax regime for contractors.
The government climbdown on the Construction Industry Scheme tax regime received a mixed response from the industry this week.

A key amendment to the regime was announced last week by chancellor Gordon Brown in his pre-budget statement after widespread concern that the scheme placed a crippling administrative burden on contractors.

The Construction Confederation declared complete satisfaction with the change, but the Federation of Master Builders said it would be pushing for further concessions.

Last week's change lowers the turnover threshold for CIS5 card-holders from £3m to £1m, allowing an extra 8000 small contractors to apply for it.

This group currently make up about 50% of CIS6 holders, who are forced to travel to present their cards in person whenever a payment is made. Up until now, CIS6 holders have had a turnover range of £30 000 to £3m.

CIS6 holders are obliged to provide the paying contractors and clients with a CIS24 voucher every time a payment is made. A different system applies to CIS5 holders, under which the paying organisation generates its own certificates.

The amendment is extremely helpful and will solve the problem for many companies

Liz Bridge, tax expert

The change kicks in at the end of this month for limited companies, and in April 2001 for partnerships.

The move, predicted in Building, is a climbdown by the Inland Revenue, which in August rejected similar recommendations made by an industry working group examining the issue.

Construction Confederation taxation director Liz Bridge said: "It is extraordinarily helpful and will solve the problem for many companies."

Bridge added that the change achieved "everything on my wishlist". She said that the Construction Confederation would not be lobbying for further amendments.

Bridge hopes to meet Inland Revenue representatives in the near future to discuss a simpler, email version of the scheme. She said: "The current system doesn't work very well because it relies on bits of paper."