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Finance Bill


Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

67

 

Registration of sub-contractors

63      

Registration for gross payment or for payment under deduction

(1)   

If the Board of Inland Revenue are satisfied, on the application of an individual

or a company, that the applicant has provided—

(a)   

such documents, records and information as may be required by or in

5

accordance with regulations made by the Board, and

(b)   

such additional documents, records and information as may be

required by the Inland Revenue in connection with the application,

   

the Board must register the individual or company under this section.

(2)   

If the Board are satisfied that the requirements of subsection (2), (3) or (4) of

10

section 64 are met, the Board must register—

(a)   

the individual or company, or

(b)   

in a case falling within subsection (3) of that section, the individual or

company as a partner in the firm in question,

   

for gross payment.

15

(3)   

In any other case, the Board must register the individual or company for

payment under deduction.

64      

Requirements for registration for gross payment

(1)   

This section sets out the requirements (in addition to that in subsection (1) of

section 63) for an applicant to be registered for gross payment.

20

(2)   

Where the application is for the registration for gross payment of an individual

(otherwise than as a partner in a firm), he must satisfy the conditions in Part 1

of Schedule 11 to this Act.

(3)   

Where the application is for the registration for gross payment of an individual

or a company as a partner in a firm—

25

(a)   

the applicant must satisfy the conditions in Part 1 of Schedule 11 to this

Act (if an individual) or Part 3 of that Schedule (if a company), and

(b)   

in either case, the firm itself must satisfy the conditions in Part 2 of that

Schedule.

(4)   

Where the application is for the registration for gross payment of a company

30

(otherwise than as a partner in a firm)—

(a)   

the company must satisfy the conditions in Part 3 of Schedule 11 to this

Act, and

(b)   

if the Board of Inland Revenue have given a direction under subsection

(5), each of the persons to whom any of the conditions in Part 1 of that

35

Schedule applies in accordance with the direction must satisfy the

conditions which so apply to him.

(5)   

Where the applicant is a company, the Board may direct that the conditions in

Part 1 of Schedule 11 to this Act or such of them as are specified in the direction

shall apply to—

40

(a)   

the directors of the company,

(b)   

if the company is a close company, the persons who are the beneficial

owners of shares in the company, or

(c)   

such of those directors or persons as are so specified,

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

68

 

   

as if each of them were an applicant for registration for gross payment.

(6)   

See also section 65(1) (power of Board to make direction under subsection (5)

on change in control of company applying for registration etc).

(7)   

In subsection (5) “director” has the meaning given by section 67 of the Income

Tax (Earnings and Pensions) Act 2003 (c. 1).

5

65      

Change in control of company registered for gross payment

(1)   

Where it appears to the Board of Inland Revenue that there has been a change

in the control of a company—

(a)   

registered for gross payment, or

(b)   

applying to be so registered,

10

   

the Board may make a direction under section 64(5).

(2)   

The Board may make regulations requiring the furnishing of information with

respect to changes in the control of a company—

(a)   

registered for gross payment, or

(b)   

applying to be so registered.

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(3)   

Section 840 of the Taxes Act 1988 (control) applies for the purposes of this

section.

66      

Cancellation of registration for gross payment

(1)   

The Board of Inland Revenue may at any time make a determination cancelling

a person’s registration for gross payment if it appears to them that—

20

(a)   

if an application to register the person for gross payment were to be

made at that time, the Board would refuse so to register him,

(b)   

he has made an incorrect return or provided incorrect information

(whether as a contractor or as a sub-contractor) under any provision of

this Chapter or of regulations made under it, or

25

(c)   

he has failed to comply (whether as a contractor or as a sub-contractor)

with any such provision.

(2)   

Where the Board make a determination under subsection (1), the person’s

registration for gross payment is cancelled with effect from the end of a

prescribed period after the making of the determination (but see section 67(5)).

30

(3)   

The Board of Inland Revenue may at any time make a determination cancelling

a person’s registration for gross payment if they have reasonable grounds to

suspect that the person—

(a)   

became registered for gross payment on the basis of information which

was false,

35

(b)   

has fraudulently made an incorrect return or provided incorrect

information (whether as a contractor or as a sub-contractor) under any

provision of this Chapter or of regulations made under it, or

(c)   

has knowingly failed to comply (whether as a contractor or as a sub-

contractor) with any such provision.

40

(4)   

Where the Board make a determination under subsection (3), the person’s

registration for gross payment is cancelled with immediate effect.

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

69

 

(5)   

On making a determination under this section cancelling a person’s

registration for gross payment, the Board must without delay give the person

notice stating the reasons for the cancellation.

(6)   

Where a person’s registration for gross payment is cancelled by virtue of a

determination under subsection (1), the person must be registered for payment

5

under deduction.

(7)   

Where a person’s registration for gross payment is cancelled by virtue of a

determination under subsection (3), the person may, if the Board thinks fit, be

registered for payment under deduction.

(8)   

A person whose registration for gross payment is cancelled under this section

10

may not, within the period of one year after the cancellation takes effect (see

subsections (2) and (4) and section 67(5)), apply for registration for gross

payment.

(9)   

In this section “a prescribed period” means a period prescribed by regulations

made by the Board.

15

67      

Registration for gross payment: appeals

(1)   

A person aggrieved by—

(a)   

the refusal of an application for registration for gross payment, or

(b)   

the cancellation of his registration for gross payment,

   

may by notice appeal to the General Commissioners or, if the person so elects

20

in the notice, to the Special Commissioners.

(2)   

The notice must be given to the Board of Inland Revenue within 30 days after

the refusal or cancellation.

(3)   

The notice must state the person’s reasons for believing that—

(a)   

the application should not have been refused, or

25

(b)   

his registration for gross payment should not have been cancelled.

(4)   

The jurisdiction of the Commissioners on such an appeal shall include

jurisdiction to review any relevant decision taken by the Board of Inland

Revenue in the exercise of their functions under section 63, 64, 65 or 66.

(5)   

Where a person appeals against the cancellation of his registration for gross

30

payment by virtue of a determination under section 66(1), the cancellation of

his registration does not take effect until whichever is the latest of the

following—

(a)   

the abandonment of the appeal,

(b)   

the determination of the appeal by the Commissioners, or

35

(c)   

the determination of the appeal by the High Court.

68      

Registration for payment under deduction: cancellation and appeals

The Board of Inland Revenue may make regulations providing for—

(a)   

the cancellation, in such circumstances as may be prescribed by the

regulations, of a person’s registration for payment under deduction;

40

(b)   

appeals against a refusal to register a person for payment under

deduction or the cancellation of such registration.

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

70

 

Verification, returns etc and penalties

69      

Verification etc of registration status of sub-contractors

(1)   

The Board of Inland Revenue may make regulations requiring persons who

make payments under contracts relating to construction operations, except in

prescribed circumstances, to verify with the Board whether a person to whom

5

they are proposing to make—

(a)   

a contract payment, or

(b)   

a payment which would be a contract payment but for section 60(4),

   

is registered for gross payment or for payment under deduction.

(2)   

The provision that may be made by regulations under subsection (1) includes

10

provision—

(a)   

for preventing a person from verifying unless such conditions as may

be prescribed have been satisfied;

(b)   

as to the period for which the verification remains valid.

(3)   

The Board of Inland Revenue may make regulations requiring the Board to

15

notify persons of a prescribed description who make payments under contracts

relating to construction operations that—

(a)   

a person registered for gross payment has become registered for

payment under deduction or has ceased to be registered under section

63, or

20

(b)   

a person registered for payment under deduction has become

registered for gross payment or has ceased to be registered under

section 63.

(4)   

The provision that may be made by regulations under subsection (1) or (3)

includes provision for a person to be entitled to assume, except in prescribed

25

circumstances, that

(a)   

a person verified or notified as being registered for gross payment, or

(b)   

a person verified or notified as being registered for payment under

deduction,

   

has not subsequently ceased to be so registered.

30

(5)   

In this section “prescribed” means prescribed by regulations under this section.

70      

Periodic returns by contractors etc

(1)   

The Board of Inland Revenue may make regulations requiring persons who

make payments under construction contracts—

(a)   

to make to the Board, at such times and in respect of such periods as

35

may be prescribed, returns relating to such payments;

(b)   

to keep such records as may be prescribed relating to such payments;

(c)   

to provide such information as may be prescribed, at such times as may

be prescribed, to persons to whom such payments are made or to such

of those persons as are of a prescribed description.

40

(2)   

The provision that may be made by regulations under subsection (1)(a)

includes provision requiring, except in such circumstances as may be

prescribed,—

(a)   

the person making a return to declare in the return that none of the

contracts to which the return relates is a contract of employment;

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Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

71

 

(b)   

the person making a return to declare in the return that, in the case of

each person to whom a payment to which the return relates is made, he

has complied with the requirements of any regulations made under

section 69(1) (verification of registration status);

(c)   

returns to contain such other information and to be in such form as may

5

be prescribed;

(d)   

a return to be made where no payments have been made in the period

to which the return relates.

(3)   

The Board of Inland Revenue may make regulations with respect to—

(a)   

the production, copying and removal of, and the making of extracts

10

from, any records kept by virtue of any such requirement as is referred

to in subsection (1)(b), and

(b)   

rights of access to, or copies of, any such records which are removed.

(4)   

Regulations under this section may make provision—

(a)   

for or in connection with enabling a person who makes payments

15

under construction contracts to appoint another person (a “scheme

representative”) to act on his behalf in connection with any

requirements imposed on him by regulations under this section, and

(b)   

as to the rights, obligations or liabilities of scheme representatives.

(5)   

In this section “prescribed” means prescribed by regulations under this section.

20

71      

Collection and recovery of sums to be deducted

(1)   

The Board of Inland Revenue must make regulations with respect to the

collection and recovery, whether by assessment or otherwise, of sums required

to be deducted from any payments under section 61.

(2)   

The regulations may include any matters with respect to which PAYE

25

regulations may be made.

(3)   

Interest required to be paid by the regulations—

(a)   

is to be paid without any deduction of income tax, and

(b)   

is not to be taken into account in computing any income, profits or

losses for any tax purposes.

30

72      

Penalties

If a person, for the purpose of becoming registered for gross payment or for

payment under deduction,—

(a)   

makes any statement, or furnishes any document, which he knows to

be false in a material particular, or

35

(b)   

recklessly makes any statement, or furnishes any document, which is

false in a material particular,

he shall be liable to a penalty not exceeding £3,000.

Supplementary

73      

Regulations under this Chapter: supplementary

40

(1)   

The Board of Inland Revenue may by regulations make such other provision

for giving effect to this Chapter as they consider necessary or expedient.

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

72

 

(2)   

The provision that may be made by regulations under subsection (1) includes

provision for or in connection with modifying the application of this Chapter

in circumstances where—

(a)   

a person acts as the agent of a contractor or sub-contractor;

(b)   

a person’s right to payments under a construction contract is assigned

5

or otherwise transferred to another person.

(3)   

Regulations under this Chapter may make different provision for different

cases.

(4)   

Any power under this Chapter to make regulations authorising or requiring a

document (whether or not of a particular description), or any records or

10

information, to be given or requested by or to be sent or produced to the Board

of Inland Revenue includes power—

(a)   

to authorise the Board to nominate a person who is not an officer of the

Board to be the person who on behalf of the Board—

(i)   

gives or requests the document, records or information; or

15

(ii)   

is the recipient of the document, records or information; and

(b)   

to require the document, records or information, in cases prescribed by

or determined under the regulations, to be sent or produced to the

address (determined in accordance with the regulations) of the person

nominated by the Board to receive it on their behalf.

20

74      

Meaning of “construction operations”

(1)   

In this Chapter “construction operations” means operations of a description

specified in subsection (2), not being operations of a description specified in

subsection (3); and references to construction operations—

(a)   

except where the context otherwise requires, include references to the

25

work of individuals participating in the carrying out of such

operations; and

(b)   

do not include references to operations carried out or to be carried out

otherwise than in the United Kingdom (or the territorial sea of the

United Kingdom).

30

(2)   

The following operations are, subject to subsection (3), construction operations

for the purposes of this Chapter—

(a)   

construction, alteration, repair, extension, demolition or dismantling of

buildings or structures (whether permanent or not), including offshore

installations;

35

(b)   

construction, alteration, repair, extension or demolition of any works

forming, or to form, part of the land, including (in particular) walls,

roadworks, power-lines, electronic communications apparatus, aircraft

runways, docks and harbours, railways, inland waterways, pipe-lines,

reservoirs, water-mains, wells, sewers, industrial plant and

40

installations for purposes of land drainage, coast protection or defence;

(c)   

installation in any building or structure of systems of heating, lighting,

air-conditioning, ventilation, power supply, drainage, sanitation, water

supply or fire protection;

(d)   

internal cleaning of buildings and structures, so far as carried out in the

45

course of their construction, alteration, repair, extension or restoration;

(e)   

painting or decorating the internal or external surfaces of any building

or structure;

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

73

 

(f)   

operations which form an integral part of, or are preparatory to, or are

for rendering complete, such operations as are previously described in

this subsection, including site clearance, earth-moving, excavation,

tunnelling and boring, laying of foundations, erection of scaffolding,

site restoration, landscaping and the provision of roadways and other

5

access works.

(3)   

The following operations are not construction operations for the purposes of

this Chapter—

(a)   

drilling for, or extraction of, oil or natural gas;

(b)   

extraction (whether by underground or surface working) of minerals

10

and tunnelling or boring, or construction of underground works, for

this purpose;

(c)   

manufacture of building or engineering components or equipment,

materials, plant or machinery, or delivery of any of these things to site;

(d)   

manufacture of components for systems of heating, lighting, air-

15

conditioning, ventilation, power supply, drainage, sanitation, water

supply or fire protection, or delivery of any of these things to site;

(e)   

the professional work of architects or surveyors, or of consultants in

building, engineering, interior or exterior decoration or in the laying-

out of landscape;

20

(f)   

the making, installation and repair of artistic works, being sculptures,

murals and other works which are wholly artistic in nature;

(g)   

signwriting and erecting, installing and repairing signboards and

advertisements;

(h)   

the installation of seating, blinds and shutters;

25

(i)   

the installation of security systems, including burglar alarms, closed

circuit television and public address systems.

(4)   

The Treasury may by order made by statutory instrument amend either or both

of subsections (2) and (3) by—

(a)   

adding,

30

(b)   

varying, or

(c)   

removing,

   

any description of operations.

(5)   

No statutory instrument containing an order under subsection (4) shall be

made unless a draft of the instrument has been laid before and approved by a

35

resolution of the House of Commons.

75      

Meaning of “the Inland Revenue” etc and delegation of Board’s functions

(1)   

In this Chapter “the Inland Revenue” means any officer of the Board of Inland

Revenue.

(2)   

In this Chapter “the Board of Inland Revenue” means the Commissioners of

40

Inland Revenue (as to which, see in particular the Inland Revenue Regulation

Act 1890 (c. 21)).

(3)   

The Board of Inland Revenue may make regulations providing for any of the

following to be done on behalf of the Board—

(a)   

the registration of persons under section 63;

45

(b)   

the giving of directions under section 64(5); and

 

 

 
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