COUNTING THE COST OF COMPLIANCE

• Between April 2007 and November 2008, the amount raised by penalties was £180 million
  
• Penalties were issued to 136,893 contractors
  
• In other words, roughly three-quarters of the contractor population has received at least one penalty for late-filing of returns and declarations under CIS
  

It’s frightening.

Like parking tickets, many of those who bother to appeal are able to get their penalties quashed.

While I suspect the majority of contractors decide to pay the penalty for the sake of an easy life, the Revenue continues to chase £67million in unpaid penalties. You can bet they won’t give up without a fight.

Hudson Contract, of course, can eliminate the penalty problem for you - forever. But more of that in a moment.

The soaring cost of a compliance review

I’ve also been looking at the statistics on status reviews, or in HMRC terms, ‘Compliance’.

• In 2006-07 the average yield was £23,000 per case
  
• In 2007-08 the figure jumped to £32,000 per case
  

Coincidentally, a construction firm that spoke to Hudson Contract this week has just had the opinion of a Status Officer claiming operatives paid as self-employed were viewed as being employees by the Revenue.

• From 2003 to date, the sum claimed by HMRC has been put at £500,000
  
• Of which £300,000 relates NIC for employers
  
• And £200,000 is said to be due in interest
  
• PLUS a further interest charge of £140 being added – every day
  

And there’s more to come. How long before you’re affected?

Worryingly for the industry in these times of recession, a further review is underway. HMRC are consulting on Modernising on CIS penalties for late filing and late payment.

On the face of it, this is about concern over consistent late-filing and consistent non-payment of penalties by a proportion of the industry.

Call me cynical, but I can’t help but wonder if HMRC are more concerned about their diminishing tax take in this tough business climate. Will the reforms that follow the consultation simply increase the yield from construction? I’ll be happy to be proved wrong.

Hudson Contract or HMRC: Who would you rather talk to?

Joking apart, the Revenue has its job to do. Death and taxes, after all, are life’s two certainties.

Having said that, Hudson Contract is the most compliant and accepted firm registered under CIS in the country:

• Last year, we contracted and paid 35,292 individuals under CIS, all of whom had their status verified and accepted by HMRC
  
• We give every client a 100 per cent guarantee covering tax and employment law liabilities
  

What are you waiting for? Your next HMRC penalty notice?

• Call us now on 0845 643 5289