|
The official figures show that in the most recent tax year 2,318 subcontractors in the construction industry had their ‘Gross Payment Status’ - their right to be paid without deductions made for tax – revoked by HMRC. This is the highest number since records began.
Over a quarter (28 per cent) of subcontractors who failed their annual review to ensure tax compliance lost their Gross Payment Status, up from 22 per cent in 2012/13.
The loss of Gross Payment Status can be severely damaging for builders, potentially resulting in higher tax, reduced cashflow, breach of contract with contractors and reduced opportunities to tender for work.
Advertisement 
Claire Johnson, Managing Director of SJD Accountancy, said: “HMRC is becoming much stricter in how it audits the construction industry for compliance and nearly a third of builders who fail their annual review are now losing their right to be paid gross.
“The impact on a builder from the loss of gross payment status can be very severe, including a higher tax bill, reduced cashflow and in some cases loss of business and the opportunity to tender for work.
“Gross Payment Status can be withdrawn for relatively minor mistakes, such as filing a return a few days late or owing a relatively small amount of tax, even if late payment was due to a bad debt causing cashflow difficulties.”
Subcontractors who lose their gross payment status for relatively minor mistakes can appeal the decision, but they will need to convince HMRC that the issue was an isolated error.
Claire Johnson said: “HMRC is increasingly rigorous in how it views compliance in the construction sector. A relatively minor slip up, even if a genuine mistake, can result in Gross Payment Status being withdrawn and builders having 20 per cent tax deducted from invoices.”
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2014
|
