Construction Industry Scheme - D-day has arrived!

The new tax regime for contractors will commence the 6 April 2007.

We have summarised below those issues that need to be dealt with now by all parties affected.

1. Subcontractors holding CIS 4 registration card.

Subcontractors will no longer need to carry a CIS card when they start on a new site. Instead they will need to provide their tax reference number and National Insurance number to the contractor to enable them to verify their tax status with HMRC. They will receive a payment advice at least once each tax month advising them of the amount they have been paid by each contractor, how much has been allowed for materials costs and the amount of tax they have suffered.

Don't forget that from 6 April 2007 the amount of tax stopped will increase from the present 18% to 20%.

2. Subcontractors receiving gross payments.

Subcontractors whose existing Exemption certificates are still current at the 6 April 2007 will no longer have to present them to contractors after this date in order to secure gross payment.

If your old style certificate has expired on or before the 31 March 2007, and you have not renewed before the expiry date, contractors will be obliged to stop tax from your earnings after 6 April 2007 at 20%. Your remedy is to reapply under the new rules for gross payment status.

3. Building Contractors who engage the services of Subcontractors.

From 6 April 2007 contractors should be aware of their obligations to:

Follow the correct procedure when taking on new subcontractors.
Verify the tax status of all subcontractors - see below.
Complete all the required monthly returns.

The verification procedure, which can be carried out over the telephone or online, involves the contractor contacting HMRC to determine how much tax to deduct from a new subcontractor. HMRC will provide a ‘verification number’ and with CIS cards being scrapped this will be the only record contractors will have that they have carried out the correct procedure. It is not sufficient to rely on the list of present sub-contractors that HMRC are issuing, as proof of status.

Where HMRC are unable to verify the subcontractor from the details supplied, the contractor will be instructed to make a deduction at the higher rate - 30% from all payments to the subcontractor.

We can provide more information if contractor clients are unsure of their obligations in respect of these issues.

4. Other contractors who may be caught by the new scheme.

It is possible that other contractors, for instance landscape gardeners, may get caught under the new scheme. In particular they need to be prepared for a 20% deduction from their labour charges when they are engaged by building contractors to landscape new building developments.

		The BIG Plan
	A4G Accountants for Growth Northams have exclusive rights to the A4G Accountants for Growth resources in the Exeter and Taunton areas. We offer a wide range of business development and help sessions aimed at growing your business and solving the problems you face. Full details are on our web site: www.northams.com – click on the A4G logo on the home page. Every month we focus on one topic which is supported by an A4G Improve and Grow session. The Big Plan So own up, have you got an up to date business plan? If the answer is no, then you are part of the 92% of businesses that don’t. It’s quite understandable, after all you have a business to run and don’t have time for plans. Even if you do have a written plan, it is quite possible that it was done purely for the bank. But a business plan does not have to be a glossy brochure. It can be a detailed plan of everything the company intends to achieve and how it will get there or a few hand-written pages of goals. *Numerous surveys have shown that the act of writing something down makes it twice as likely that it will happen.* Deciding what your long-term objectives are is the first step. You should then consider what contribution each area of your business makes towards achieving these objectives. As you do so, write down all the ideas and changes you would like to implement and separate them into three lists: Short-term goals Medium-term goals Long-term goals Now put a time scale to each list. For very new businesses, short-term may mean a month for others it could mean a year. Short-term goals are likely to be far more specific than the medium-term or long-term goals. What do you then do with the plan? Well don’t file it. Pin it on the wall or give to every member of your company. Whatever it takes to help get the contents actually done. New businesses are much better at this sort of stuff than more mature ones. They have enthusiasm but perhaps more importantly they don’t have baggage. That is the baggage of “we have always done it this way” or that changes are somehow an admittance that we have been getting it wrong all these years. Well the world moves on and we all have to adapt in order to survive. Using someone outside the business to help makes a big difference. They often see what those in the business don’t want to admit to seeing. Colin Gillard has over 25 years of experience as a Chartered Accountant working with hundreds of businesses. Working with Colin, you can tap into that experience. Typically we would meet or at least speak every month to monitor progress and Colin will therefore act as a motivator (some would say nag) to make sure things get done. And do you know the best thing about doing this? It not only improves your business, it also makes it more fun. So, when are you going to start work on The Big Plan? Speak to Colin Gillard on 01404 45994 to see what A4G can do for you.


	DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.