Construction has reacted angrily to the Treasury’s refusal to accept changes to the Inland Revenue’s industry tax scheme.Construction Confederation chairman Peter Andrews said the decision, announced by paymaster-general Dawn Primarolo this week, showed that the government was turning a blind eye to the scheme’s problems.
The confederation had been campaigning for reforms that would reduce the time and money firms have to spend complying with the scheme, which was introduced last November to curb tax avoidance. Andrews said: “Her decision rides roughshod over the needs of the industry and ignores the huge compliance burden the Construction Industry Scheme has imposed on construction. We are very frustrated and disappointed at this decision, which we find incomprehensible.”
Andrews said the effect would be disastrous, burdening contractors and subcontractors with a huge amount of paperwork. He added: “We are horrified that we have been forced into this position when we have tried so hard to find acceptable compromises.” Primarolo’s announcement comes after the joint working group, set up by chancellor Gordon Brown, failed to come up with changes that were acceptable to the Treasury.
We are very frustrated and disappointed at this decision, which we find incomprehensible
Peter Andrews, Chairman, Construction Confederation
Andrews dismissed the group, which included representatives from the industry, top clients, the DETR and the Treasury, as toothless.He said: “It is clear now that the joint working group was no more than a sop to try to reduce MPs’ postbags. Nothing we have said has been taken on board.”Andrews’ attack was echoed by Ian Davis, the Federation of Master Builders’ director-general.
Davis said: “I think there will be a very strong reaction from our members. This will lead to a lessening in choice, as subcontractors will not want to work within the tax regime, and a lessening in skills.” Davis said the federation would be lobbying for changes at this autumn’s party conferences. An Inland Revenue spokesperson said the working group was still meeting and looking at ways to make the scheme more workable.
She said: “We have not stopped this. The idea is to come up with ways around the difficulties experienced by the industry.”