Construction tax crackdown will have far-reaching consequences
Tighter tax evasion construction regulations could hit firms who do not even consider themselves part of the construction industry, a tax advisary firm is warning.
The new HM Revenue and Customs’ regulations, known as the Construction Industry Scheme, increase reporting procedures for the construction industry to tighten up monitoring of subcontractors who fail to declare income. However, companies will be deemed contractors and brought within the scheme if their annual expenditure on ‘construction operations’ exceeds £1m a year over the last three years, ending with their last accounting date. This could affect companies such as painters and decorators.
Martin Barber from the Middlesbrough office of Vantis plc, the AIM listed accountancy, tax and business advisory firm, said: “The onus will be on each business to determine the employment of each individual it employs and pay HMRC accordingly. Those that don’t, or classify employees incorrectly, will face financial penalties or possible investigation. “HMRC has already announced it is to almost double the number of Employer Compliance Reviews it carries out. Clearly, the level of adherence to the CIS and correct classification of employees will be more closely scrutinised than in the past.”