Not that big a shock
As a software developer I would like to point out that it was made clear in the HMRC techpacks that both the higher and lower rates for CIS were yet to confirmed. To hardcode it as 18% after being given that warning seems foolish.
Some software will handle the change more easily
As pointed out, most software should allow users to edit the deduction rates. Some packages (such as COINS) also recalculate the tax at the point of generating the payment. This avoids the need to reverse out unpaid transactions when a subcontractor's status changes or the deduction rate changes. Thus this should not present too much of an administrative headache for COINS users - it is just one more thing to remember in the transition period (to change the rate at the correct point).
Jim Etherton, Senior Product Manager, COINS.
www.coins-global.com
20% another U-Turn ?
I hazzard a guess that this new deduction rate is to encourage subcontractors to file their SA Returns earlier as much as to settle the tax liability.
When the rate was 25% subbies were all clamouring at the door to "get me refund". I guess that was 100,000's of SA's filed earlier which have been filed much later in the last few years !
Begs the question, why was that not thought of when the rate was reduced to 18%.
Lets see if the deduction rate goes to 22% next year.