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HMRC have changed their advice on the Construction Industry Training Board (CITB) levy, following a backlash from building firms.
The Revenue announced in January that it would no longer allow contractors to recoup the CITB charge from subcontractors in the form of a deduction made from the “gross amount of payment” on monthly returns.
HMRC have changed their advice on the Construction Industry Training Board (CITB) levy, following a backlash from building firms.
The Revenue announced in January that it would no longer allow contractors to recoup the CITB charge from subcontractors in the form of a deduction made from the “gross amount of payment” on monthly returns.
The construction sector expressed concerns about the proposed change – scheduled to take place on 6 April – leading HMRC to review the tax implications of the practice of passing to subcontractors the fee that helps fund the CITB’s promotion of vocational training in the construction industry.
The tax department’s revised advice states, “Where contractually agreed deductions such as insurance charges, amounts equal to the CITB levy or any other training costs are deducted before payment then [the construction industry scheme] is only operated on the amount paid after any deduction for materials and VAT.”
The subcontractor’s supply for VAT purposes will be reduced by the equivalent amount of the deduction where the parties have contractually agreed to an amount equating to the CITB charge being passed to the subcontractor.
