CIS: 'Comply or lose out'

News Article - 08 March 2007
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British workers who do not ensure that they comply with the new construction industry scheme (CIS) could find themselves at risk of losing gross payment status, it has been claimed.

Contractors will need to make sure that they prepare for the CIS by confirming that none of the payments included on their returns relate to employment contracts, incurring up to £3,000 for each single declaration, the Workplace Law Network reports.

Additionally, sub-contractors should also follow measures to comply with the new regulations, such as registering with HM Revenue & Customs (HMRC) to avoid tax deduction at the 30 per cent rate.

The chances of self-employed workers being recategorised as employees is also due to rise with the new CIS, the publication states.

If this is the case, HMRC would be able to seek pay-as-you-earn arrears, including interest and penalties.

To avoid such situations, workers should be able to prove that they have discussed employment status with their sub-contractors.

It was recently suggested by the Institute of Chartered Accountants in England and Wales that the cost of implementing the new CIS could be up to ten times higher than Treasury estimates, despite being designed to be cheaper.

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