INLAND Revenue chiefs are knocking back scores of renewal applications for company CIS tax certificates.
Contractors are being left out of pocket by the new get-tough policy, which prevents them receiving payments gross of tax and National Insurance. Construction News understands more than 300 renewal applications a month are currently being turned down.
Alan Nolan, a director of accountant KPMG, said: 'This will have catastrophic consequences for many subcontractors, who will find it impossible to trade competitively without a certificate, resulting in many being forced out of business. An Inland Revenue inspector told us that over 600 had been refused renewals in the last two months alone.'
The crackdown follows a High Court ruling against a Derbyshire-based builder. The firm was originally refused a new CIS6 certificate on the grounds that it had been late with tax and NI payments. The company won an appeal but was challenged and beaten by the revenue in the High Court.
The owner of the £2 million-a-year turnover firm, who asked to remain anonymous, said: 'This has been an horrific experience.
Some bills were late coming to me on a job and I was a bit late with my tax for a few months. But I've been a taxpayer for 15 years.
There was no flexibility or chance for me to explain the circumstances and they turned down my application.
'Contractors are being treated unfairly.
They wouldn't treat you like this in any other industry if you were late with a few payments.'
An Inland Revenue spokeswoman said:
'We did win this High Court case and the implications of that have been spelt out in a letter with new guidelines sent to all our tax inspectors. We don't keep statistics on how many renewal applications are turned down but we do treat everyone fairly.'
Mr Nolan added: 'The Inland Revenue is now acting on this decision, refusing to renew certificates on the grounds of what can be considered to be minor compliance failures.'
Construction Confederation tax director Liz Bridge said: 'We have had calls over CIS6 refusals but until now they have been over persistent late payment of PAYE money to the revenue.'