Contractors in the building industry are reminded that the new Construction Industry Scheme (CIS) is scheduled to start on 6 April 2007 and that the tax deduction rate for subcontractors registered for net payment is 20 per cent (not 18 per cent as previously proposed). Subcontractors who are not registered under the CIS will have tax deducted at 30 per cent.
The new scheme depends on contractors making the correct evaluation of the status of those working for them and care must be taken over this. HM Revenue and Customs' online employment status tool should be of assistance and it is a comfort to know that PAYE inspectors have been told not to 'second guess' decisions made by using it. The online tool allows you to print a copy of the questions and answers used, so that the justification for any particular decision made by using it can be retained.
For information on assessing employment status see http://www.hmrc.gov.uk/employment-status/index.htm. Guidance on the CIS can be found at http://www.hmrc.gov.uk/cis/section3b.htm.
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