The much delayed new Construction Industry Scheme will dispense with the current system of cards, certificates and vouchers. When contractors take on a new subcontractor they must contact HMRC to confirm whether payment should be made net of 18% tax or gross. This process is known as verification.
A timetable of what should be happening follows. Please get in touch if you would like more information.
HMRC will provide contractors with details of subcontractors they have used in the last two years who will be treated as verified. Contractors should check these records and then obtain the name, address, unique taxpayer reference or company registration number from those not contained on HMRC’s list so that they can be verified before the start of the new system. Without verification, tax must be deducted at a higher rate yet to be agreed. (30% is being used in HMRC illustrations.)
Contractors can check their IT system via the HMRC internet gateway.
HMRC will issue contractor packs detailing the new rules.
Contractors should verify any subcontractors they are using who were not included on the list issued to contractors in November.
HMRC will issue details of all newly verified subcontractors to contractors.
6 April is the ‘go live’ date for the new system!