How construction companies can keep the taxman happy
No matter how successful your company is, there’s one thing that should always remain high on your priority list – keeping the taxman happy. In our world of ever-changing legislation and regulation, that can sometimes seem like a challenge. However, the consequences of failing to comply with HM Revenue and Customs’ (HMRC) requirements can be serious – construction companies have recently been fined more than £130m for infringements.
If you’re a financial director, there are a number of rules you can’t afford to forget. Ask yourself these three key questions:
- Do I make sure my subcontractors don't work for me to the extent that they can no longer be called self-employed?
- Do I meet my obligations for CIS?
- Are my financial reports accurate enough to satisfy the taxman?
Do any of your answers make you feel uncomfortable? You’re not alone. Staffing and resource issues can mean many construction companies struggle to do everything they need to do to comply.
Here’s how to manage compliance more effectively
Many construction companies use subbies to provide expert skills and flexible labour. Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HMRC.
In the past, some construction companies were guilty of wrongly classifying workers as self-employed, in order to avoid paying national insurance. By April 2015 however, employment agencies will have to report workers who are not taxed as employees to HMRC, and they will be fined if they don’t. On the other hand, if you’re self-employed or own a limited company and work for a contractor, you need to register for the CIS.
Naturally, there’s been a lot of controversy about the changes, with some companies arguing that it has hit their competitiveness. The changes are here to stay and the taxman will continue to want his dues. It’s well worth making sure you have the right software to keep your accounts and company data up to date. It’s a sad fact that during the recession, a lot of construction companies made savings in this area and now their systems are not really fit for purpose.
How construction software can help
Good construction software gives you instant access to all the information you need. A state-of-the-art system provides end-to-end visibility of your CIS situation, making sure you can easily see which tax payments have been made. Even better, the system will also automatically ensure that you are up to date with CIS legislation, so you don’t have to do it.
In addition, it will record, verify and report all your CIS payments automatically. It means you’ll comply effortlessly so you can get on with the important business of running your company – safe in the knowledge that you and HMRC are going to remain friends!
- Failing to comply with HMRC can be costly.
- Rules on CIS are still changing – stay up to date.
- Good construction software can make CIS compliance a breeze.
Tax isn’t the only money issue that needs handling. Discover how to keep costs down with better construction project management so as to get the bigger picture for the lifetime of every project.
Environment Agency clamps down on plastic films and wraps
Businesses in the waste and construction industries must ensure they deal with waste plastic properly to stop illegal exports, the Environment Agency (EA) has warned.
The warning comes as the Agency is increasingly aware of plastic film and wrap from the construction and demolition sector being illegally exported.
Exports are frequently being classified as ‘green list’ waste of low risk to the environment, but are often contaminated with materials such as mud, sand, bricks and wood, posing a risk to the environment and human health overseas, and undermining legitimate businesses in the UK seeking to recover such waste properly.
During the last year, the EA has intercepted shipments to prevent the illegal export of this material on numerous occasions. The Agency inspected 1,889 containers at English ports and stopped 463 being illegally exported. This, combined with regulatory intervention upstream at sites, prevented the illegal export of nearly 23,000 tonnes of waste.
Those convicted of illegally exporting waste face an unlimited fine and a two-year jail sentence. But construction firms could also face enforcement action if contaminated construction and demolition waste plastic is illegally exported.
Malcolm Lythgo, Head of Waste Regulation at the Environment Agency, said it is seeing a marked increase in the number of highly contaminated plastic film and wrap shipments from the construction and demolition industry being stopped by officers.
“I would strongly urge businesses to observe their legal responsibility to ensure waste is processed appropriately, so we can protect human health and the environment now and for future generations. It’s not enough just to give your waste to someone else - even a registered carrier. You need to know where your waste will ultimately end up to know it’s been handled properly. We want to work constructively with those in the construction and waste sectors so they can operate compliantly, but we will not hesitate to clamp down on those who show disregard for the environment and the law.”
There are a number of simple, practical steps that businesses can take to ensure that C&D site waste is handled legally.
Construction businesses should check what’s in their waste
- Different waste types need different treatments and so must be correctly categorised to ensure it goes to a site that is authorised to handle it safely. Businesses can also check if their waste is hazardous as different rules might apply.
- If you are removing the waste yourself, you must be a registered waste carrier- registration can be carried out here. When a waste collector is transporting your site waste, you must check they have a waste carrier’s licence from the EA.
- You must also check that the end destination site any waste is taken to is permitted to accept it and has the right authorisations in place. Keep a record of any waste that leaves your site by completing a waste transfer note or a consignment note for hazardous waste which record what and how much waste you have handed over and where it is going.
Waste management industry must adhere to export controls
- Contaminated C&D waste plastic - including low-density polyethylene (LDPE) wrap and film - must be exported with prior consent from the EA as well as competent authorities in transit and destination countries.
- Those involved in the export of such waste must ensure that it meets the requirements set under the relevant export controls, such as being almost free-from contamination; the destination sites are appropriately licensed to receive and treat the waste; and waste is correctly managed once received.
The EA will continue to actively target those who export contaminated C&D plastic waste illegally, including any accredited packaging exporters who issue Packaging Waste Export Recovery Notes (PERNs) against such material in breach of their Conditions of Accreditation.
Businesses involved in the shipment of waste are required to take all necessary steps to ensure the waste they ship is managed in an environmentally sound manner throughout its shipment and during its recycling.
Anyone with information regarding the illegal export of waste including C&D waste plastics can contact the EA’s Illegal Waste Exports team at: [email protected] or anonymously via Crimestoppers on 0800 555 111 or via their website