Press Release – A Time To Build Confidence In Accounts
Tuesday Nov 27th, 2012-11-27
From the desk of Terry Hort founder and director of:
H&H Accountants – Taunton – Ilminster – Axminster – Chard – Crewkerne – Yeovil
PRESS RELEASE PRESS RELEASE PRESS RELEASE
A time to build confidence in accounts
As the winter season is upon us, H&H Accountants advises companies in the building and construction industries to invest part of any downtime in making sure their administration and accounting systems deliver the full cashflow benefit.
Founder and owner Terry Hort says that ‘we are increasingly seeing that the cashflow of many building subcontractors in the construction industry is often being restricted because many have failed the Gross Payment Status tests set by HMRC. In 99% of cases this is simply a result of oversight and poor planning ahead. However, the short-term consequences can be very expensive indeed.’
Liz Coleman, a chartered certified accountant, is part of the H and H team. Having grown up in Ilminster and surrounding areas, Liz has seen the issues first hand as they apply to the construction and building sectors in the South West. She notes that ‘to be paid by a main contractor without any deduction of tax, a subcontractor must register with HMRC and also pass a number of qualifying tests. These tests include proving that the business carries on construction in the UK, has a minimum level of annual turnover and has also complied with all of its tax obligations.’
The full story, however, does not end there: whilst the first two tests are fairly conclusive, the test of compliance with all tax obligations extends to the timely submission of various forms for not only the Construction Industry Scheme (CIS) but also Pay As You Earn (PAYE), personal tax and corporation tax, and involves the actual payment of the various taxes on time.
‘Any one of these matters can prove to be a sticking point,’ advises Liz. ‘And even if a subcontractor passes all of these tests initially, HMRC carry out annual reviews to confirm that a subcontractor should maintain Gross Payment Status.’
If any of the tests are failed, HMRC may not award Gross Payment Status to the subcontractor, and as a result contractors would be obliged to deduct 20% tax from payments made to the subcontractor.
And whilst this deduction is treated by HMRC as a payment on account towards the subcontractor’s tax liability, it can affect the subcontractor’s cashflow substantially. In addition, some contractors prefer to use only subcontractors with Gross Payment Status. ‘This can clearly restrict scope in selling and quoting for new business,’ says Liz, ‘and may have an adverse effect on the subcontractor’s overall prospects.’
Furthermore, since March 2011 case law dictates that HMRC should review a subcontractor’s Gross Payment Status on an individual basis, rather than rely on a computer program to determine the outcome, as was done previously.
Local construction and building industry subcontractors of all kinds are therefore encouraged to get in touch with Terry Hort or Liz Coleman at H and H Accountants. Companies may include those wishing to take pre-emptive accounting and administrative action, those who have been refused Gross Payment Status in the past, or those simply wishing to check their current status. Addressing the issues with expert help may result in improved cashflow.
You can contact Terry Hort or Liz Coleman at H and H Accountants on 01460 52666, email them at firstname.lastname@example.org or see www.handhaccountants.com for further details.
All press enquiries to Terry Hort – please – 01460 52666 email@example.com