Government seeks to simplify CIS Tax and CITB Levy

n the Budget, the Chancellor said he intended to simplify the Construction Industry Scheme (CIS) tax regime that covers the construction industry. A review of the scheme is now underway by HM Revenue & Customs and you are invited to contribute – indeed, the views of specialist contractors are particularly sought. You can read more about that and find out how to download the consultation document on the Natural Stone Specialist website.

The CITB is also reviewing the way its levy system works with the aim of making it quicker and easier to calculate what you should pay and complete the levy return.

CITB has suggested a simplified system based on CIS payments to sub-contractors who are paid net of tax. The 2012 Levy Order narrowed the definition of a labour-only agreement, but it remains open to interpretation, which can be confusing.

The National Specialist Contractors Council (NSCC) has been involved throughout the development process and the NSCC Training Committee has reviewed the likely impact of the proposals.

It says research shows that the majority of specialist contractors will pay a similar levy under the proposed changes as they currently pay.

NSCC says if the changes are accepted, the new system should be far simpler with a number of benefits for employers. These include:

  • No additional record keeping as employers will simply use records kept for HMRC purposes to identify both PAYE and relevant Net CIS sub-contractor figures
  • Removal of the uncertainty of the current system in regards to labour-only sub-contractors
  • Less time-consuming and therefore less expensive to complete
  • Less scope for error when completing a levy return.

CITB says if the proposed changes are approved, they are unlikely to take effect until 2017.