Statutory Instrument 1998 No. 2622

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

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STATUTORY INSTRUMENTS

1998 No. 2622
INCOME TAX
The Income Tax (Sub-contractors in the Construction Industry) (Amendment) Regulations 1998

	Made	23rd October 1998
	Laid before the House of Commons	23rd October 1998
	Coming into force	23rd November 1998

The Commissioners of Inland Revenue, in exercise of the powers conferred on them by sections 559(3A), 560(2)(ea), 562(2A) and (11), 564(2A)(b), 565(2A) and (2B) and 566 of the Income and Corporation Taxes Act 1988[1] and by section 98A(1) of the Taxes Management Act 1970, hereby make the following Regulations:

Citation, commencement and effect
1. - (1) These Regulations may be cited as the Income Tax (Sub-contractors in the Construction Industry) (Amendment) Regulations 1998.

(2) These Regulations shall come into force on 23rd November 1998, but except as otherwise provided shall have effect -

Interpretation
     2. In these Regulations "the principal Regulations" means the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993[2] and "regulation" means a regulation of those Regulations.

Amendments to Part I of the principal Regulations
     3. - (1) Regulation 2 shall be amended as follows.

    (2) In paragraph (1) -

(a) before the definition of "the Board" there shall be inserted -

" "applicant", except in regulation 20A, shall be construed in accordance with section 562[

" "user of a registration card" means the person to whom a registration card which has not expired or been cancelled has been issued, and includes, where a registration card has been issued to a company under regulations 7C(4) and 7D(2), a director or secretary of that company who is authorised to use that registration card;

"user of a sub-contractor's tax certificate" means a person to whom a sub-contractor's tax certificate which has not expired or been cancelled has been issued, and includes, where a sub-contractor's tax certificate has been issued to a company under regulation 24(5) or (6), a director or secretary of that company who is authorised to use that certificate."

(3) In paragraph (2) -

" "the qualifying period"

"registration card"

"relevant payments"

"a relevant person in relation to the company"."

(4) For paragraph (4), the following paragraphs shall be substituted -

Term defined	Regulation
tax payment voucher	7
the individual turnover threshold	21A(1)
the multiple partnership turnover threshold	21A(2)
the multiple company turnover threshold	21A(3)
the alternative partnership turnover threshold	21A(5)
the alternative company turnover threshold	21A(6)
gross payment voucher	29
construction gross payment voucher	37A.

Amendments to Part II of the principal Regulations
4. For regulation 3 the following regulations shall be substituted -

" Interpretation of Part II

In this Part of these Regulations and regulation 40A, "payment to which section 559[

and related expressions shall be construed accordingly.

Bodies to which subsection (2) of section 560 applies
3A. The bodies which are designated as bodies to which subsection (2) of section 560[9] applies, being bodies (in addition to those falling within paragraphs (aa) to (e) of that subsection) which have been established for the purpose of carrying out functions conferred on them by or under any enactment, are those specified in Schedule A1 to these Regulations."

     5. Regulation 5 shall be omitted.

     6. Regulation 6 shall be omitted.

     7. - (1) Regulation 7 shall be amended as follows.

    (2) In paragraph (1) -

(a) for the words "paragraph (3), on the making" there shall be substituted the words "the following paragraphs of this regulation, in respect";

(b) for the words "deduction certificate" there shall be substituted the words "tax payment voucher".

(3) In paragraph (2) -

(a) in sub-paragraph (a) the words "and address" shall be omitted;

(b) for sub-paragraph (b) there shall be substituted -

(d) the word "and" immediately following sub-paragraph (f) shall be omitted; and

(e) at the end, there shall be added -

(4) For paragraphs (3) to (5) there shall be substituted -

" (3) The contractor shall give a tax payment voucher to the sub-contractor in respect of all such payments made within a period of one income tax month, and the tax payment voucher shall be signed by the contractor and be given to the sub-contractor within 14 days of the end of that income tax month.

(4) Within 14 days of the end of every income tax month the contractor shall either -

(5) Where the contractor transmits the particulars electronically as mentioned in paragraph (4)(b), the tax payment voucher shall be a single copy, in the form designated CIS25(E) in Schedule 1 to these regulations, which he shall give to the sub-contractor, but otherwise, the tax payment voucher shall be in triplicate, in the form designated CIS25(I) or CIS25(M) in Schedule 1 to these regulations, and the copy to be given to the sub-contractor shall be the copy marked "Subcontractor copy.""

8. - (1) After regulation 7 the following regulations shall be inserted -

" Registration cards - powers of inspectors and persons nominated by the Board

7A.

- (1) The power to issue or replace a registration card may be exercised either by an inspector or by any person nominated by the Board.

(2) The power to require the surrender of, or cancel, a registration card may be exercised by an inspector.

Registration cards - appeals

7B.

- (1) Any person aggrieved by the refusal to issue or replace a registration card under regulation 7A(1) or the cancellation of a registration card under regulation 7A(2) may, by notice given to the Board within 30 days after the refusal or, as the case may be, the cancellation, appeal to the General Commissioners or, if he so elects in the notice, to the Special Commissioners, to determine the matter.

(2) The like provisions as are contained in Part V of the Management Act[

Form of registration card

7C.

- (1) A registration card shall be prepared by an authorised officer of the Board or any person nominated by the Board -

in Schedule 1 to these regulations.

(2) Where a registration card, other than a temporary registration card, is issued to an individual otherwise than as a partner in a firm, the card shall show -

(3) Where a registration card, other than a temporary registration card, is issued to an individual as a partner in a firm, the card shall show -

(4) Where a registration card, other than a temporary registration card, is issued to a company, the card shall show -

(5) Where, in a case to which paragraph (3) or (4) applies, the registration card shows a business name under which the firm's or company's business is carried on, that business name shall be the same as that which appears on all other cards that are uncancelled, which have been issued to the partners in the firm or to the company.

(6) A temporary registration card may be issued, showing the same information as is required by paragraph (2), (3) or (4), as the case may be, but with the substitution for sub-paragraph (b) in each case of -

Issue of registration card
     7D. - (1) A registration card containing the information specified in regulation 7C(2) or (3), as the case may be, shall be issued by an inspector or any person nominated by the Board, to the individual whose name, national insurance number and photograph appear on it.

    (2) A registration card containing the information specified in regulation 7C(4) shall be issued by an inspector or any person nominated by the Board, to the company whose name appears on it.

Production for inspection and surrender of a registration card
     7E. - (1) A user of a registration card, or any person having a registration card in his possession, shall, whenever required to do so by an authorised officer of the Board, produce the registration card to that officer for inspection.

    (2) A user of a registration card, or any person having a registration card in his possession, shall, whenever required to do so by an authorised officer of the Board (whether or not by way of notice served on him by that officer), surrender the registration card to the Board or to that officer.

    (3) Paragraphs (1) and (2) shall apply whether or not the registration card in question has been cancelled, at the time the requirement is made by the authorised officer of the Board.

Production and verification of a sub-contractor's registration card
     7F. - (1) Before making any payment to which section 559 applies to a sub-contractor, and unless the circumstances specified in paragraph (3) apply, a contractor shall -

(a) ensure that the sub-contractor's registration card is produced to him, and

(b) satisfy himself by inspection of the registration card that the person producing it is the user of that registration card.

(2) For the purposes of paragraph (1), the user of the registration card shall, whenever required to do so, produce the registration card for inspection by the contractor or the contractor's authorised representative.

(3) The circumstances specified in this paragraph are that the contractor -

(a) has previously caused the sub-contractor's registration card to be produced to him, and

(b) thereby satisfied himself as mentioned in paragraph 1(b), and

(c) has no reason to doubt that the person who produced it remains the user of that registration card."

    (2) Regulations 7A to 7E shall have effect on or after 23rd November 1998.

     9. Regulation 11 shall cease to have effect in relation to any period after 31st July 1999.

     10. In regulation 13[11], in paragraph (12), for "11" there shall be substituted "40A".

     11. Regulation 20 shall cease to have effect except in relation to companies as respects accounting periods ending before the day appointed by the Treasury under section 199 of the Finance Act 1994[12], for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).

     12. After regulation 20 the following regulation shall be inserted -

" In-year repayments of provisional excess credit

20A.

- (1) Where -

(a) a sub-contractor is an individual or a firm,

(b) an application is made by that individual or a partner in the firm ("the applicant") to the inspector,

(c) any income tax and Class 4 contributions due from the applicant, or the sub-contractor, on the applicant's share of the annual profits or gains arising or accruing from the trade, profession or vocation of the sub-contractor, for any earlier year, have been paid,

(d) all relevant tax payment vouchers issued to the sub-contractor under regulation 7, and such further evidence as the inspector may require, are produced to the inspector, and

(e) the inspector is satisfied by such evidence that the applicant's share of the total of sums deducted under section 559[

the appliant shall, subject to paragraphs (3) and (4), be entitled to repayment of the excess by the inspector.

(2) The amounts specified in this paragraph are -

(3) Every such application shall be on a form approved by the Board, containing a declaration that all the particulars given in the form are correctly stated to the best of the knowledge and belief of the applicant, and where the application is made by a partner in a firm, the form shall be signed by all the partners in the firm who are individuals and, where a partner is a company, by the secretary or a director of the company.

(4) No repayment under this regulation shall be made after the end of the year to which the application relates."

Notes:

[1] 1988 c.1. Section 559(3A) was inserted by paragraph 1(3) of Schedule 27 to the Finance Act 1995 (c.4). Section 560(2)(ea) was inserted by paragraph 2(1)(b) of Schedule 27 to the Finance Act 1995. Section 562(2A) was inserted by paragraph 4(3) of Schedule 27 to the Finance Act 1995 and section 562(11) was amended by paragraph 4(6) of Schedule 27 to the Finance Act 1995. Section 564(2A) was inserted by paragraph 6 of Schedule 27 to the Finance Act 1995, and amended by paragraph 3(1) of Schedule 8 to the Finance Act 1998 (c.36). Section 565(2A) and (2B) were inserted by paragraph 7(1) of Schedule 27 to the Finance Act 1995, and amended by paragraph 4(1) of Schedule 8 to the Finance Act 1998. Section 566 was amended by paragraph 9 of Schedule 27 to the Finance Act 1995, by section 178(1) of, and Part V(32) of Schedule 41 to, the Finance Act 1996 (c.8), and by paragraph 6 of Schedule 8 to the Finance Act 1998. Section 566(1) was extended by section 98A(1) of the Taxes Management Act 1970 (c.9) which was inserted by section 165(1) of the Finance Act 1989 (c.26).back

[2] S.I. 1993/743; amended by S.I. 1995/217, 448, 1996/981.back

[3] Section 562 was amended by paragraph 4 of Schedule 27, and Part VIII(21) of Schedule 29, to the Finance Act 1995.back

[4] 1982 c.10.back

[5] 1990 c.19.back

[6] 1978 c.29.back

[7] 1988 c.1. Section 559 was amended by paragraph 1 of Schedule 27, and Part VIII(21) of Schedule 29, to the Finance Act 1995, by section 54(5) of the Finance Act 1997 (c.16), by paragraph 2(1) of Schedule 8 to the Finance Act 1998, and by S.I. 1989/2405 (N.I.19).back

[8] Section 561 was amended by paragraph 5 of Schedule 17 to the Finance Act 1994 (c.9) and by paragraph 3 of Schedule 27 to the Finance Act 1995.back

[9] Section 560 was amended by paragraph 1 of Schedule 2 to the Housing (Scotland) Act 1988 (c.43), paragraph 116 of Schedule 17 to the Housing Act 1988 (c.50), paragraph 2 of Schedule 27 to the Finance Act 1995 and paragraph 2 of Schedule 8 to the Finance Act 1998.back

[10] 1970 c.9.back

[11] Amended by S.I. 1995/448.back

[12] 1994 c.9.back