Revenue minefield on the cards for builders, warns tax expert

Lianne Cooper

18 July 2008

BUILDING contractors face an Inland Revenue minefield, warns a Droitwich-based tax expert.
Chartered accountants, Ormerod Rutter Solutions, which specialises in a wide range of small business services, is concerned that new documentation introduced by the Inland Revenue last year is having a devastating effect on both contractors and sub-contractors in the building and construction industry.
Consultant Sue Wright said: "Many mid-range contractors, including the smaller operators down the line who regularly sub-contract, have yet to come to terms with the complexities of the new system.
"But as the new accounting year gets under way they could find themselves facing large penalty charges for non-compliance."
Previously, contractors simply issued vouchers detailing payments to their sub contractors and relevant tax deductions.
But now new regulations require contractors to submit monthly returns to the Inland Revenue, listing all their sub contractors and registration numbers, in addition to payments and tax deductions. There are strict time scales and penalty charges for missing set deadlines.
All contractors are responsible for generating their own documentation of tax deducted for their sub contractors. They must also consider the employment status of each person they engage.
Again, failure to comply can result in hefty penalty charges all round.
Mrs Wright added: "We predict many construction companies and their sub contractors are falling foul of the new regulations, simply because they do not understand the requirements of the new scheme or do not have the resources or capability to deal with them effectively."
Ormerod Rutter is offering a complete administration package to keep companies on the right side of the Inland Revenue.
The service includes verification of sub contractors, regular monthly on-line returns to the Inland Revenue, maintenance of tax payment records and sub contractor’s tax statements.
In the case of limited companies, the accountants will also monitor tax suffered to keep tax payments to a minimum.
Free consultation sessions are being held at the Droitwich offices throughout June and July.
For more information call 01905 823939.

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