Failure to comply with the rigorous demands of the Construction Industry Scheme (CIS) can have very serious consequences for construction sector businesses.
We are experts in CIS and can help with any CIS issue, from planning, through compliance and ultimately to appeals against HMRC decisions, especially appeals against loss of gross payment status.
Although we handle all aspects of CIS, the issues we are most often asked about are listed below.
If your issue is not on the list call us on 0845 643 5450 to discuss how we can help you.
Appeals against loss of Gross Payment Status
HMRC check all registered subcontractors annually to ensure that they have complied with all their tax obligations. This is called the Tax Treatment Qualifying Test (TTQT) and is now done fully automatically by HMRC’s computer. Where failures are identified (beyond the minor exemptions permitted), the computer issues an automatic notice advising the subcontractor that gross payment status will be withdrawn in 90 days’ time. The decision can be subject to an application for review and to hearing by the Tax Tribunal.
Loss of gross payment status is often disastrous for a subcontractor, having implications not just for cash flow, but also for tendering for contracts as the subcontractor is unable to demonstrate full compliance.
We have handled many appeals against withdrawal of gross payment status. In our experience the best strategy is to apply for a review and to concentrate on submitting the best possible case to the reviewing officer. Statistics show that the prospects for success at the review stage are much better than at the Tax Tribunal. This is understandable, as the Tribunal will take a narrow, strictly legal approach to the appeal, whereas HMRC has more scope for exercising discretion.
We can help you with your review application or with representation before the Tax Tribunal.
Employment status of subcontractors
A big risk area for contractors is the employment status of subcontractors. HMRC frequently challenges the self-employed status of subcontractors and invariably challenges labour-only subcontractors. A successful challenge can be very costly to the contractor, especially if the subcontractor has not paid their own tax.
We have considerable experience of defending employment status challenges and can help with every aspect, up to and including appeals to the Tax Tribunal if necessary.
We can also assist with reviewing or designing procedures and contracts to ensure that, in the event of a PAYE compliance check, you are able to withstand a challenge from HMRC. Call Tony Borman on 0845 643 5450.
Scope and application of CIS
Sometimes it is not clear whether particular activities are within CIS or not. We can help you by providing a formal opinion or obtaining a formal ruling from HMRC.
Tax clauses in construction contracts
We can advise your lawyers on any CIS, VAT, or other tax clauses in construction contracts.
Non-UK contractors carrying out construction activities in the UK are caught by the UK CIS rules. We act as tax agents for a number of non-UK contractors and can assist with:
- Gross payment status applications
- Advice and training on UK CIS compliance
- VAT registration and returns
- UK ‘Permanent Establishment’ issues
- Corporation Tax