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Opinion: What's so bad about the CIS Regulations?

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31st Aug 2005
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The overall reaction to the latest Construction Industry Scheme tax regulations has been overwhelmingly negative. But Trevor Bingham of Pegasus reseller Xperience sees a light at the end of the tunnel.

There has been much in the press about the forthcoming legislative changes affecting the Construction Industry.

Even a cursory glance at the detail of the regulations is enough to have many contractors and subcontractors reaching for the Valium. But is it all doom and gloom?

The construction industry is one of the most fiercely competitive markets today, with a significant portion of the responsibility for profit or loss being dispersed across a number of parties.

In addition to the costs of materials being accurate, contractors need to ensure any subcontracted projects are brought in to budget without compromising on quality. Such a compromise will not only displease the client, but will also reflect badly on the contractor's future attempts to secure business, especially if he is working primarily from referrals.

The new CIS legislation is obviously an unwelcome additional burden. But it may actually benefit contractors who want to compete on a level playing field. With the introduction of tighter controls, those who endeavour to work 'by the book' will reap the benefits.

The new scheme places considerable pressure on contractors to consider the employment status of the workers they engage. In some cases, this responsibility will require contractor to make a technical decision, sometimes based on conflicting guidelines.

Yet there is comprehensive, computer software available which has been developed specifically to provide contractors with the means to address not just the CIS issue, but also more business-critical issues that affect them daily.

With the growing availability of reasonably priced industry-specific solutions, contractors and subcontractors should be able to meet the challenge of CIS head on.

About the author
Trevor Bingham works as part of a team at Xperience... that has been working closely with contractors and subcontractors alike to implement flexible, industry-focused software that gives them a competitive edge. Like many of his colleagues, Trevor has experience in the IT industry and can draw on his own experiences to guide clients through the administrative demands of the new CIS regulations. Trevor Bingham can be contacted via email at [email protected] or by phone on 0870 830 7330. Also see the company's page in AccountingWEB's Reseller Channel

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Replies (8)

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By User deleted
03rd May 2006 13:59

Driven by the largest contractors
My understanding is that the new CIS will benefit most the largest contractors who might prefer to do everything electronically with a minimum of physical paperwork.

I understand that the past year's drive to convert self-employed subcontractors into employees is driven by pressure from the largest contractors - "unfair competition" if smaller contractors use self-employed rather than employees.

This leaves the Government feeling obliged to look after the plcs, even if it hurts small business.

The new CIS will benefit Software providors and the plcs, and conversely help increase overhead costs for small business. I don't expect the Government to be greatly concerned at this.

One area of alleged non-compliance was with deemed contractors (eg. some large retail plcs) - so rather than target these defaulters the whole industry must be bashed, more harshly so in economic tterms for small business.

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By egbell
03rd May 2006 16:43

New CIS
I agree entirely with the comments made.As usual,the bias is towards big business,as I doubt this goverment has any interest or concern for small builders.The fact that they provide an essential service for a large part of the population cuts no ice with our lofty rulers etc.

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By Robert Clubb
05th Sep 2005 13:32

Who Were The Designers?
From what I have ascertained of the new scheme to date, I am in no doubt that big contractors will be happier with the terms. So they should be as, principally, they were the people that HMR&C consulted, and this is reflected in the many of the changes.

I, and I know many HMR&C staff, are very concerned as to how the small 'subbie' will cope.

It's all very well saying that they will have to and that there is 'clever' software being developed, but if they haven't got a computer, or have only just mastered sending an email, the learning curve will be very steep. It may even be a mountain.

There are small low tech businesses out there but, as is so often the case, their views are not sought, or they are overshaddowed by the big boys.

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By stratty
05th Sep 2005 15:19

why fix something that isnt broke
i don't see what is all that wrong with the current system

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By AnonymousUser
05th Sep 2005 14:09

NEW??????????
After 6 years of newCIS we now have NEWCIS. That about says it all.
There is no point in having any scheme which is unworkable, although this is probably the best of the bunch. It has only taken 30 years to get there.
The consrtuction industry is different to other industries for many varied reasons and that is why all Contractors and sub-contractors should be self-employed. The Inland Revenue have the power to investigate expenses so the RIGHT tax is paid. Trouble is in his search for a few extra bob Mr Brown wants everybody, apart from large organisations, on PAYE.
Have the powers that be not learnt anything in the last 30 years??????????? It appears not.

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By AnonymousUser
05th Sep 2005 11:41

A Poor Curate's Egg
The new CIS is not all bad but much of the good seems to be overcome by the bad.

The ability to verify Sub Contractors and send in returns over the Internet is good - if you have the software
BUT
Software suppliers will not be able to start testing their systems against the government web site until later this year, a bit late for a system that goes live next April 5th
AND
The new main identifier is the UTR, the Unique Tax Reference of each UK taxpayer, but it is not unique, The Revenue can allocate a single UTR to a whole group, so if you deal with different parts of a large organisation you may have several Sub Contractors with the same UTR.

This is just one of many examples of new problems being introduced without enough time to understand and test them. The Revenue says it is consulting but in my experience the Revenue's idea of "consulting" is telling you, in vague outline, what is going to happen.

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By NBWNBW
02nd Sep 2005 14:42

Opinion?
This reads more like an advertisment than an opinion

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By egbell
01st Sep 2005 16:31

Vested interest?
After reading Mr Bingham's comments ,I then read his current work situation & it seems to me that perhaps he has a has a slightly biased view or vested interest in the matter.Maybe I'm just too old & cynical about people's motives.

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