After frantic lobbying by the Construction Confederation and the Federation of Master Builders, the Revenue last week unveiled two measures to ease the burden of the Construction Industry Scheme, set to come into force on 1 August.
It said contractors could apply for a dispensation to continue using the existing 714 system of gross payment to subcontractors until 5 November; it also offered an alternative method that has already been criticised by the industry.
This involves subcontractors sending contractors photocopies of temporary tax payment cards on headed paper rather than presenting their cards to contractors in person, as planned in the new scheme.
But in a briefing note to members, the Construction Confederation this week said it had "severe reservations" about this concession. It said there would still be too much processing involved for contractors to use the system to pay those subcontractors that sent copies of documents before 1 August.
The confederation produced its note because it believes an official statement by the Revenue promotes the "photocopies" option at the expense of retaining the 714 system, which it favours.
Contractors should not be lulled into a false sense of security by this postponement
Les Angell, Laing
Senior tax managers at major contractors were this week too relieved to quibble too much over the Revenue's move. Laing group taxation manager, and chairman of the industry's Joint Taxation Committee, Les Angell, said that to have made no concessions would have been disastrous: "The result would have been an unprecedented payment crisis and construction work would have almost certainly ground to a halt." He warned contractors that have still not applied for their certificates to do so as soon as possible.
"Contractors should not be lulled into a false sense of security by this postponement," said Angell.
Tax experts were also wary of how widely available the dispensation to use the 714 system would be. The Revenue's statement says only that "the individual circumstances of each contractor will be considered" after it applies for a dispensation.
Alastair Kendrick, director of entrepreneur services at accountant Ernst & Young, said: "The problem with the dispensation to continue with 714s is that it is still dependent on the Revenue agreeing to it.
