The Income Tax (Sub-contractors in the Construction Industry) (Amendment) Regulations 1998

Explanatory Note

(This note is not part of the Regulations)

These Regulations further amend the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993 (S.I. 1993/743 as amended by S.I. 1995/217, 448, 1996/981 (“the principal Regulations”)). These amendments carry into effect the new “Construction Industry Scheme” for the taxation of sub-contractors in the construction industry.

The main effect of these Regulations is that sub-contractors applying for a certificate under section 561 of the Income and Corporation Taxes Act 1988 (c. 1) have to meet the turnover thresholds provided for by regulations 21A to 21E, inserted by regulation 14 of these Regulations. These Regulations also make provision for sub-contractors who do not hold such certificates to hold registration cards (regulations 7A to 7F, inserted by regulation 8(1)).

The amendments have effect for most purposes from 1st August 1999, but also for earlier applications for sub-contractors' tax certificates valid on or after that date (see regulations 1 and 8(2)).

Regulation 1 provides for citation, commencement and effect.

Regulations 2 and 3 provide for interpretation.

Regulation 4 inserts a new definition regulation 3 in the principal Regulations, and a new regulation 3A which designates bodies deemed to be a contractor under sections 559(1) and 560(2)(ea) of the Income and Corporation Taxes Act 1988 (“the Taxes Act”).

Regulations 5 and 6 revoke regulations 5 and 6 of the principal Regulations.

Regulation 7 makes amendments to the requirements relating to what were formerly called deduction certificates (SC60's), to be known as tax payment vouchers under the new Construction Industry Scheme.

Regulation 8 inserts regulations 7A to 7F, making provision for registration cards. Regulations 7A to 7E have effect on or after 23rd November 1998.

Regulations 9 and 10 revoke regulations 11 (in relation to any period after 31st July 1999) and 13 of the principal Regulations.

Regulation 11 provides that regulation 20 of the principal Regulations shall cease to have effect, except in relation to companies in the period prior to Corporation Tax self-assessment.

Regulation 12 inserts a new regulation 20A, making provision for in-year repayments of tax.

Regulation 13 inserts a new regulation 20B, making provision for contracts relating to small amounts to be excepted from section 559 of the Taxes Act.

Regulation 14 inserts new regulations 21A to 21E, making provision for the new “turnover thresholds” for sub-contractors applying for a certificate under section 561 of the Taxes Act.

Regulations 15 and 16 amend regulations 22 and 23 of the principal Regulations, relating to proof of compliance with section 562(8) of the Taxes Act.

Regulation 17 inserts new regulations 23A and 23B, making further provision relating to the proof of such compliance.

Regulation 18 makes amendments relating to the form of sub-contractors' tax certificates and regulations 19, 20 and 21 make provision relating to the issue, validity and production of such certificates.

Regulation 22 makes amendments relating to the form of vouchers, to be known as “gross payment vouchers” (CIS24's) under the new Construction Industry Scheme.

Regulations 23 and 24 revoke regulations 30 and 32 of the principal Regulations.

Regulation 25 makes amendments to the requirements to produce and verify a sub-contractor’s tax certificate.

Regulation 26 inserts a new regulation 35, relating to the completion of gross payment vouchers by sub-contractors.

Regulations 27 and 28 revoke regulations 36 and 37 of the principal Regulations.

Regulation 29 inserts a new regulation 37A, relating to the completion of construction gross payment vouchers where the sub-contractor is a company with a sub-contractor’s tax certificate in the special CIS5 form.

Regulation 30 makes amendments relating to the completion of gross payment vouchers.

Regulation 31 makes amendments relating to the return of gross payment vouchers and construction gross payment vouchers.

Regulation 32 revokes regulation 40 of the principal Regulations, in relation to any period after 31st July 1999.

Regulation 33 inserts a new regulation 40A, relating to an annual return by contractors, of payments made either subject to deduction of tax, or not so subject.

Regulation 34 makes amendments relating to the inspection of records of contractors and sub-contractors.

Regulation 35 makes provision for the electronic transmission of documents or particulars pursuant to reporting requirements.

Regulation 36 revokes regulation 45(2) of the principal Regulations.

Regulation 37 inserts Schedule A1 in the principal Regulations, listing the bodies designated under section 560(2)(ea) of the Taxes Act.

Regulation 38 inserts a new Schedule 1, containing representations of documentation under the new Construction Industry Scheme. Regulation 38 also revokes schedule 2 of the principal Regulations.