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A new set of regulations has been published relating to the new Construction Industry Scheme (CIS), which is due to come into effect from 6 April 2007.

The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2007 (SI 2007/672) amend the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045) (i.e. the principal regulations relating to the new CIS).

Regulation 10 of the principal Regulations provides for HMRC to issue a notice to a contractor requiring a return to be made and, on receipt of that return, to issue a certificate showing the amount which the contractor is liable to pay for that period and how much remains unpaid. These Regulations amend Regulation 10 to provide that HMRC, where the contractor has already submitted a return for the period, may prepare a certificate showing the amount included on that return which remains unpaid.

Regulation 19 of the principal Regulations inadvertently omitted the word “applies”. These Regulations correct that omission.

Regulation 20 of the principal Regulations provides that a reverse premium, as defined in Finance Act 1999, Schedule 6, is not a contract payment (and therefore not within the scheme). The definition in Schedule 6 applies only to companies. These Regulations amend Regulation 20 to include reverse premiums as defined in section 99 of the Income Tax (Trading and Other Income) Act 2005. This applies the exception in Regulation 20 to ndividuals.

Finally, Regulation 22 of the principal Regulations provides that, in certain circumstances, a payment made by a person to whom Finance Act 2004, s. 59(1)(l) of the  applies is not a contract payment (and therefore not within the scheme).

Regulation 22(2)(a) disapplies the exception where property, amongst other things, is for sale or to let. These Regulations amend regulation 22(2)(a) so that the exception does apply where the sale or letting is purely incidental to the business of that person.

Link

Income Tax (Construction Industry Scheme) (Amendment) Regulations 2007 (SI 2007/672)

Explanatory Memorandum to SI 2007/672