THE MOBILE ACCOUNTANT,

 

 

 

  

 
Inside Section 2

 

 
New Construction Industry Scheme ( CIS ) from 6.4.2007

As many of you will be aware the present CIS scheme is being replaced with effect from the New Tax Year 6th April 2007. I am writing to give you a brief overview for your information:-

The Main features of the new scheme are:-

  1. There will be NO CIS cards

  2. There will be NO Vouchers

  3. Existing payment status will be transferred to new scheme

  4. All new Sub contractors (and those not paid within the last two tax years) will need to be verified with the Inland Revenue by telephone or Internet.

  5. There will be no Annual Return, HOWEVER THERE WILL INSTEAD BE MONTHLY RETURNS.  This will include a declaration of Status, i.e. you will have to sign each month to say that each Sub contractor is Self-Employed

  6. There are Three different types of Payment status - Gross Payment, Net of Standard Rate deductions (Which will be increased to a rate of 20%) and Net of Higher Rate deductions (Which will be at a rate of 30%)

  7. There will be a New Compliance Test

  8. There is a new Appeals procedure.

  9. There are substantial Penalties for LATE and INCORRECT RETURNS. These are:-

Action Penalty
Failure to send in the monthly return to HMRC ( including a NIL Return) £100 per 50 subcontractors ( or part thereof) per month. After 12 months a penalty of 100% of the undeclared CIS deductions , subject to mitigation.
Sending in an incorrect monthly return ( either negligently or fraudulently) UP to 100% of the under-declared CIS deductions, subject to mitigation.
Failure to produce CIS Records for HMRC to inspect when required to do so. Up to £300 penalty plus up to £60 per day for continuing failure.
Failure to provide a subcontractor with a payslip Up to £300 penalty plus up to £60 per day for continuing failure.
Making a false statement in order to register for gross payment or payment under deduction Up to £3000
Making an incorrect declaration about employment status (either negligently or fraudulently) Up to £3000
The Penalty for failure to submit the monthly return will not be levied before 19 October 2007 but it will be levied on any return outstanding at that date. If the monthly return that is submitted late shows no tax to be paid the penalty is reduced to £100 NOT nil.

 

 

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