THE REVAMPED GOOD as new construction industry scheme will (probably) be with us next year. It will change the mechanics of the old scheme but does not change the underlying rules about exactly what payments should have 18% tax deducted by the contractor.
The construction industry scheme sets out to deduct tax from the labour element of payments made to subcontractors. The rule is set out in TA 1988 s 559:
'On making a payment to which this section applies the contractor shall deduct from it a sum equal to the relevant percentage of so much of the payment as is not shown to represent the direct cost to any other person of materials used or to be used in carrying out the construction operations to which the contract under which the payment is to be made relates.'
Following a recent employer compliance visit ...
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