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Delays over tax rebates add to subbies' cashflow worries

PRESSURE is growing for a public inquiry into the way the Inland Revenue is handling the industry's new tax scheme after revelations of yet another problem to add to the catalogue of errors.

Tax expert Alastair Kendrick is warning of disastrous cashflow difficulties for subbies because of computer problems in processing tax refunds under the CIS certificate scheme.

Software programs to sort out rebates for up to 500,000 subbies are still not ready. The refunds will now have to be processed by hand.

Mr Kendrick said: 'Surely it is now time for a public inquiry into this shambles. This latest problem will hit cashflow. Small businesses could go to the wall while they wait for their tax repayments.'

One worried subbie said: 'This is another kick in the teeth for us on the new certificate scheme. Now we don't even know when we'll get our tax refunds.'

Liz Bridge, head of tax at the Construction Confederation, said: 'This problem will slow down repayments. We're back to where we started, when the Inland Revenue processed refund applications by hand.'

The Inland Revenue admitted that a backlog of refunds was building up, but declined to say how many applications had still to be processed.