Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme
71

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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
may be prescribed, returns relating to such payments;
5
(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.
(2)
The provision that may be made by regulations under subsection (1)(a)
10
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;
(b)
the person making a return to declare in the return that, in the case of
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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
be prescribed;
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(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
from, any records kept by virtue of any such requirement as is referred
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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
under construction contracts to appoint another person (a “scheme
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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.
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Collection and recovery of sums to be deducted
35
(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
regulations may be made.
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(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.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme
72

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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
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(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
10
(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.
(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—
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(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
or otherwise transferred to another person.
(3)
Regulations under this Chapter may make different provision for different
cases.
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(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
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
25
Board to be the person who on behalf of the Board—
(i)
gives or requests the document, records or information; or
(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
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address (determined in accordance with the regulations) of the person
nominated by the Board to receive it on their behalf.
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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
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subsection (3); and references to construction operations—
(a)
except where the context otherwise requires, include references to the
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
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otherwise than in the United Kingdom (or the territorial sea of the
United Kingdom).
(2)
The following operations are, subject to subsection (3), construction operations
for the purposes of this Chapter—

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme
73

(a)
construction, alteration, repair, extension, demolition or dismantling of
buildings or structures (whether permanent or not), including offshore
installations;
(b)
construction, alteration, repair, extension or demolition of any works
forming, or to form, part of the land, including (in particular) walls,
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roadworks, power-lines, electronic communications apparatus, aircraft
runways, docks and harbours, railways, inland waterways, pipe-lines,
reservoirs, water-mains, wells, sewers, industrial plant and
installations for purposes of land drainage, coast protection or defence;
(c)
installation in any building or structure of systems of heating, lighting,
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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
course of their construction, alteration, repair, extension or restoration;
(e)
painting or decorating the internal or external surfaces of any building
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or structure;
(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,
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site restoration, landscaping and the provision of roadways and other
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;
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(b)
extraction (whether by underground or surface working) of minerals
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;
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(d)
manufacture of components for systems of heating, lighting, air-
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-
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out of landscape;
(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;
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(h)
the installation of seating, blinds and shutters;
(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—
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(a)
adding,
(b)
varying, or
(c)
removing,

any description of operations.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme
74

(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
resolution of the House of Commons.
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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
5
Revenue.
(2)
In this Chapter “the Board of Inland Revenue” means the Commissioners of
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
10
following to be done on behalf of the Board—
(a)
the registration of persons under section 63;
(b)
the giving of directions under section 64(5); and
(c)
the cancellation under section 66 of a person’s registration for gross
payment.
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76
Consequential amendments
Schedule 12 to this Act (which makes consequential amendments) has effect.
77
Commencement and transitional provision
(1)
This Chapter has effect in relation to payments made on or after the appointed
day under contracts relating to construction operations.
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(2)
Where a certificate issued to a person under section 561 of the Taxes Act 1988
is in force immediately before the appointed day, the person is to be treated as
if, on the appointed day, the Board of Inland Revenue had registered him for
gross payment.
(3)
Where a registration card issued to a person in accordance with regulations
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made under section 566(2A) of the Taxes Act 1988 is in force immediately
before the appointed day, the person is to be treated as if, on the appointed day,
the Board of Inland Revenue had registered him for payment under deduction.
(4)
Subsection (5) applies in relation to the first payment (“the relevant payment”)
made after the appointed day by a person (“C”) to a sub-contractor (“SC”)
30
under a contract relating to construction operations if—
(a)
before the appointed day, C had made one or more payments to SC
under the contract or another such contract,
(b)
the last of those payments (“the last payment”) was made in the year of
assessment in which the relevant payment was made or in either of the
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two years of assessment before that,
(c)
at the time of the last payment—
(i)
a certificate issued to SC under section 561 of the Taxes Act 1988
was in force, or
(ii)
a registration card issued to SC in accordance with regulations
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made under section 566(2A) of that Act was in force, and
(d)
on making the relevant payment, C has no reason to believe that SC—

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 4 — Personal taxation
75

(i)
did not become registered for gross payment or (as the case may
be) for payment under deduction by virtue of subsection (2) or
(3), and
(ii)
is not still so registered.
(5)
Where this subsection applies, regulations under section 69(1) shall not require
5
C, before making the relevant payment, to verify whether SC is registered for
gross payment or for payment under deduction.
(6)
Where subsection (5) applies, C shall be entitled to assume, on making any
further payments to SC under a contract relating to construction operations,
that SC has not subsequently ceased to be so registered, unless notified to the
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contrary in accordance with regulations made under section 69(3).
(7)
In this section “the appointed day” means such day as the Treasury may by
order appoint.
(8)
The Treasury may by order make such further supplemental and transitional
provision and savings as they think fit in connection with the coming into
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effect of this Chapter.
Chapter 4
Personal taxation
Taxable benefits
78
Childcare and childcare vouchers
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(1)
Schedule 13 to this Act contains amendments of the Income Tax (Earnings and
Pensions) Act 2003 (c. 1) relating to childcare and childcare vouchers.
(2)
The amendments have effect for the year 2005-06 and subsequent years of
assessment.
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Exemption for loaned computer equipment
25
(1)
In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003
(employment income: miscellaneous exemptions), section 320 (limited
exemption for computer equipment) is amended as follows.
(2)
For subsection (1) substitute—
“(1)
If conditions A and B are met in respect of the provision of computer
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equipment—
(a)
no liability to income tax arises by virtue of section 62 (general
definition of earnings), and
(b)
liability to income tax by virtue of Chapter 10 of Part 3 (taxable
benefits: residual liability to charge) arises only in respect of so
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much of the aggregate cash equivalent of the benefit in the tax
year as exceeds £500.”.
(3)
Omit subsections (4) and (5).
(4)
This section has effect for the year 2004-05 and subsequent years of assessment.