Business Newsletters - Winter 2005

The Construction Industry: A Glimmer of Hope?

The new Construction Industry Scheme (CIS) was due to take effect in April 2006 but this has been deferred to April 2007. In a previous newsletter we reported that, ahead of the changes planned for 2007, the Revenue was adopting a zero tolerance policy regarding the renewal of exemption certificates. In other words renewal of CIS certificates for subcontractors was being denied where a contractor had regularly paid over their own employees’ PAYE deduction late. In turn non-renewal can cause severe financial hardship.

A recent case (Cormack v CBL Cable Contractors Ltd) appears to offer a glimmer of hope. The Revenue had refused renewal of a CIS5 certificate on the grounds that the company in question had made late payments and late submissions of returns. In the High Court it was decided that this did not demonstrate ‘a cavalier attitude’ to obligations under the CIS. Even if there were defaults they may not be significant for tax purposes and it could not be inferred that the company would continue to offend. The certificate was therefore renewed. Note however that there have been other recent cases (see for example Glaze & Frame Ltd v HMRC) where persistent late payment of PAYE led to renewal of the exemption certificate being refused.

Please talk to us if you have any concerns over renewal of exemption certificates or any other aspect of the CIS.

Top of page

Print Page