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Construction Industry
The introduction of the new taxation rules for
the Construction Industry Scheme has been put
back to 6 April 2007 by HMRC who are currently
holding a series of presentations around the
country explaining the changes from the current
scheme. The main changes are as follows.
- There will no longer be any need for CIS
cards, certificates or vouchers.
- Contractors must check or “verify” new
subcontractors with HMRC.
- Subcontractors will still be paid either net
or gross, depending on their own circumstances.
However, it will be HMRC that tells the
contractor which treatment to use during
verification.
- There will be a higher rate tax deduction if
a subcontractor cannot be “matched” on the HMRC
system. This will apply until the subcontractor
contacts HMRC and registers or sorts out any
matching problem.
- Contractors must make a return every month
to HMRC detailing payments made to all
subcontractors.
- Contractors will have to make what is known
as a “Status declaration” each month
declaring that none of the workers on the
subcontractors list are employees.
- Nil returns must be made when there are no
payments in any month. These can be made over
the telephone, via the internet, or on paper and
there will be financial penalties for failure to
submit a return.
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2005 Tax Returns
With the 31 January deadline for submission of
tax returns rapidly approaching, it is worth
remembering the penalties that may be imposed
for late submission. While the £100 penalty for
delivering a return within six months of the due
date doesn’t seem to bother a number of people
judging by the level of late submissions each
year, HMRC also have the power (in certain
circumstances) to charge daily penalties of up
to £60 per day. Further, if a return has not
been submitted within twelve months of the
filing date, a further penalty equivalent to the
total tax due for the year of assessment may be
imposed.
Inheritance Tax –
Agricultural Property Relief
Farmers and their tax advisers will have read
with interest that HMRC have won a court case
where only the agricultural value of the farm
house (not it’s full market value) qualified for
inheritance tax agricultural property relief
i.e. the 40% tax will have to be paid on the
difference. In addition, it was commented that
the farmhouse would only qualify if the owner or
their spouse farms the land on a day to day
basis or did so prior to retirement. Leave to
appeal has been granted however. This may not be
the end of the story just yet.
David S Robertson
Associate Director
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