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HMRC Prods Contractors Over Imminent Introduction Of CIS

by Jason Gorringe, Tax-News.com, London

26 March 2007


With the new Construction Industry Scheme coming into force in less than two weeks' time, contractors in the UK are being urged again by HM Revenue & Customs (HMRC) to make sure that they can hit the ground running.

The new scheme is being launched on 6 April, and according to HMRC, will "make life easier for customers and ensure a level playing field for all".

By removing the need for subcontractors' old tax certificates and registration cards, the UK tax authority states that it has simplified the process for contractors and subcontractors.

From April, registration cards and tax certificates will no longer be valid, and will be replaced with a verification service. Contractors will be able to verify with HMRC whether the person or firm they are engaging is registered as a subcontractor, and whether the subcontractor should be paid gross or have money deducted, by going online or phoning the Department.

There are a number of steps contractors need to undertake before entering into a working arrangement with a subcontractor. Contractors must:

  • Establish the subcontractor's employment status;
  • Check whether the subcontractor is on the list HMRC sent them in March, of subcontractors they don't need to verify, then verify subcontractors not on that list to find out whether the payment to the subcontractor should be made gross, or should have a deduction made at the standard rate of 20 per cent or the higher rate of 30 per cent; and
  • Start sending HMRC a monthly return with all the details required about their subcontractors' payments and deductions, where appropriate, as well as confirmation that they have checked their subcontractors' employment status. The first monthly return needs to be with HMRC by 19 May.

New CIS Programme Director, Mark de Brunner, stated last week that:

"With only two weeks to go, the construction industry needs to make its final preparations, so that it is up and running by 6 April."

He added:

"There is a lot of help available if contractors need it - online and over the phone."


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