Industry claims changes to rules on tax registration cards will lead to new surge in bogus self-employment.
The Inland Revenue has made what the industry has described as an "amazing U-turn" over the new construction industry tax scheme.

The scheme, to be introduced in August, will bring in three new tax codes in an attempt to stamp out tax fraud in construction. However, it was alleged that the new rules could lead to a return to widespread bogus self-employment.

The Revenue was accused of an about-turn after it announced that a photo-registration card for self-employed operatives, the CIS4, would be available to anyone who applies for it.

It had been expected that operatives applying for the CIS4, which replaces the SC60 and deducts tax at source, would have to produce evidence that tax had been paid.

Now, they will only have to provide a National Insurance number and apply for the card. Those without an NI number will be given a card valid for three months.

The change has prompted fears that there could be a return to bogus self-employment only two years after the Revenue clamped down on it.

Speaking at the Confederation of Construction Specialists' annual conference last week, Revenue inspector Leyton Partridge told specialists that there was no barrier to site operatives obtaining the new CIS4.

He said: "There is no reason why we wouldn't issue a [CIS4] registration card, even if we don't know the past financial history of the applicant."

Speaking after the conference, Colin Harding, chairman of Bournemouth-based contractor George & Harding, said: "It's a considerable change of policy. Previously, they said a subcontractor wouldn't get a CIS4 unless his tax was in order."

Bob Blackman, construction secretary with the Transport and General Workers Union, added: "This confirms my worst fears. It's a licence for unscrupulous subcontractors to pressurise workers back into bogus self-employment. The idea of getting a temporary card without an NI number is a joke."

A spokesperson for the Revenue denied that the card would lead to an increase in bogus self-employment.

Harding said he welcomed the move to relax the availability of the CIS4, but added that the confusion over the introduction of the new CIS5 certificate for construction companies was causing "considerable hardship" to small contractors.

The CIS5 card replaces the 714C. It does not contain a photograph and can be used to prove that a company can be paid gross. To obtain the CIS5 card, companies must show a turnover in excess of £5m, or make a "strong business case" to be given one.