CONSTRUCTION bosses fear their industry could be thrown into chaos when the Inland Revenue launches its latest weapon in the battle against building site fraudsters.

For many years, only sub-contractors holding special certificates could be paid gross and so enjoy generous cash-flow benefits by escaping the clutches of PAYE or the special sub-contractor tax deductions.

But new certificates being introduced in August mean that, without the proper paperwork, sub-contractors won't get paid at all!

Robin Newman, construction industry specialist at the Oxford office of business advisers Grant Thornton, said: "The Inland Revenue has long been concerned about tax fraud through sub-contractors not declaring income.

"Now the scheme is being overhauled and from August 1, the stakes will be considerably higher.

"At the moment there are approximately 400,000 certificates in circulation, but the Inland Revenue estimates that it will only issue 200,000 of the 'new improved' variety.

"Potentially this means that half the sub-contractors in the UK will suffer reduced cash flow from August onwards."

To obtain the new certificates, sub-contractors must supply details of bank accounts and contracts and the certificates will only be issue if tax affairs are up to date and are kept up to date.

Mr Newman said: "The most striking thing about the new regime is that unless a sub-contractor actually holds a new certificate - or a registration card called a CIS4 - the contractor will be forbidden to pay over any money at all.

"Many construction industry bosses believe there will be chaos in the scramble to obtain the new certificates as August draws nearer."

Story date: Tuesday 13 April

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