The Finance (No. 3) Act 2010, Schedule 10 and the Finance Act 2009, Schedule 55 and Sections 101 to 103 (Appointed Day, etc) (Construction Industry Scheme) Order 2011

EXPLANATORY NOTE

(This note is not part of the Order)

Under the income and corporation taxes Construction Industry Scheme, a contractor making contract payments(1) must make a monthly return to HM Revenue & Customs (“HMRC”) not later than the 19th day of each month(2).

This Order appoints 6 October 2011 as the day on which two changes to the Scheme enter force.

First, penalties for failure to comply will arise under the Finance Act 2009, Schedule 55 instead of as provided for by S.I. 2005/2045(3).

Second, late payment of that penalty (or late repayment by HMRC) will carry interest under the Finance Act 2009, sections 101 to 103(4).

A full Impact Assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from the HMRC website at http://www.hmrc.gov.uk/better-regulation/ia.htm.

(1)

Or payments that would be contract payments but for the Finance Act 2004 (c. 12), section 60(4) (exception for payee registered for gross payment, etc under the Scheme).

(2)

S.I. 2005/2045, regulation 4(1) (and see also footnote (d) on page 1).

(3)

Articles 2(a), 2(b) and 3 of this Order. (Article 2(a) brings into force on 6 October 2011 relevant amendments to the Finance Act 2009 (c. 10), Schedule 55 made by the Finance (No. 3) Act 2010 (c. 33), Schedule 10. Articles 2(b), 3(1) and 3(2) simultaneously bring the new penalty regime into force, incorporating those amendments, for returns due after 19 October 2011. Article 3(3) makes a consequential amendment to the old penalty regime in S.I. 2005/2045, regulations 4(12) and 4(13) which continue to apply for returns due no later than 19 October 2011.)

(4)

Article 2(c) of this Order, which brings into force for these purposes on 6 October 2011 the Finance Act 2009 (c. 10), sections 101 to 103.