Firms with less than £5m turnover set to have their paperwork cut out for them by the taxman.
The Inland Revenue is set to abandon one of the main elements of the construction industry tax scheme following protests from the industry about its cost.

The move will mean that small firms will be spared some of the paperwork associated with the scheme. Under the Revenue’s original requirements, firms with a turnover of less than £5m had to fill in a CIS24 voucher every time they were paid. This was then sent to the client, which endorsed it and sent copies to the contractor and the Revenue.

It is understood that under the new proposals, smaller firms (CIS6 certificate holders in the language of the scheme) will send their CIS23 vouchers directly to the Revenue, as firms with turnover of more than £5m do.

The move follows widespread industry disaffection at the bureaucracy and cost of managing the system.

The Construction Confederation met with officials from the Treasury this week to demand that the Revenue merge two of the scheme’s tax codes.

Construction Confederation tax expert Liz Bridge said it told the Revenue that if the scheme was not amended, the confederation would launch a national campaign and petition the government directly to have it abolished.

Bridge said: “We have made it quite clear to the Revenue that the CIS24 voucher is completely unworkable and the system is grinding to a halt.”

She added: “The compliance costs for CIS24 vouchers are up to four times higher than other vouchers in the scheme. It is urgent that the Revenue act on this issue. The CIS24 voucher must be scrapped.”

Firms affected by the CIS6 classification complained of discrimination and the effect of the paperwork on clients. One subcontractor said using the CIS24 voucher made him feel “like a criminal”.

He said: “The fact that I have to send in vouchers for my client to pass on to the tax people on my behalf makes me look like a Mickey Mouse business. Why should my clients have to put up with the extra burden of paperwork? It’s ridiculous.”

Both the Revenue and Bridge declined to comment on any abandonment of the CIS6 category, but it is understood that proposals to simplify the system or merge it with the other code will be put forward within the next four weeks.

The scheme was launched last year as part of the Revenue’s attempts to clamp down on tax avoidance in the construction industry.