The challenge for small businesses that work on the periphery of the building industry is that in the interests of trying to crack down on fraud within the industry HM Revenue and Customs has applied rules and regulations without all of the sophistication needed to prevent unintended consequences creating knock on problems. I work for a company that installs sound equipment, CCTV and visual equipment such as flat screen displays and projectors. The Construction Industry Scheme is designed to ensure that building contractors don’t evade Tax, and so responsible employers are told to pay contractors that are not registered within the CIS after first deducting 30% of the sum agreed, as this is presumed to be the Tax and National Insurance that would be due. The Contractor can then claim this sum against their own Tax and NI Bill. However the principle falls down when a company such as ours that is not registered because we are not part of the Construction Industry, is treated by the Contractor as though we were part of the Industry. The Tax rules attempt to define which industries are exempt from the scheme by virtue of their activities and which are not. However discussing with an Accountant or Help Desk worker who cannot be expected to know what the difference is between ducting, trunking and conduit can be very frustrating. Ducting which is an underground chamber for cables and other services and is included within the CIS, but conduit and trunking which are attached to the surface of a wall or ceiling appear not to be covered within the CIS. Public Address systems and most CCTV systems are specifically excluded from the scheme, but projectors and flat screen displays are not mentioned anywhere in the documentation.
After several days attempting to persuade a company that owes us over £10,000 that we are not part of the construction industry, and waiting for HMRC to give us their clarification, we were told over the phone that as far as HMRC was concerned we were exempt and could be paid in full. This seemed like good news. However when I asked the person concerned to put that in writing, she explained that if we needed to have something in writing we would need to write in requesting clarification and she could not promise how long it would take but it would certainly be several weeks. I then asked if we could encourage the company which owes us the money to speak to her. She agreed that getting them to ring the helpline would make a lot of sense. Can I have a reference to our conversation? We don’t keep a record of our discussions she explained and they would need to start the conversation she explained. The idea that this companies accountants would be willing to spend 2 days and explain in detail what work we carry out is unlikely, and the cost of 100’s of companies duplicating information and enquiries on the helpline seems to be a complete waste of time and money. That is public money and people we employ to work for our Government agency. It is doubly frustrating for our small business that a helpline we fund through our taxes, does not keep a record of advice given, which could be used to ensure our employees get paid in full!