HM Revenue and Customs has postponed the launch of an online tax filing system that employers had warned would create chaos.
Construction sector employers and software suppliers have lobbied HMRC for a delay to the system for the past year. They argued that HMRC had failed to provide sufficient time for construction companies to test their software with HMRC’s new IT system.
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Construction companies will now be required to validate their sub-contractors’ tax status using the new system from 1 April 2007 instead of a year earlier, as originally proposed.
The chief executive of the Business Application Software Developers’ Association (Basda), Dennis Keeling, said, “We are very pleased with the result; it’s a bit of a shock to us.”
Basda sent HMRC a letter just after the general election requesting that it delay the mandatory introduction of CIS by a year.
HMRC said, “We have been monitoring industry’s implementation progress for some time. Latest soundings indicated that the cumulative risk around readiness had become unacceptably high.”
HMRC has also postponed the launch of a third-party website, which was designed to test suppliers’ messaging capabilities. The website had been due to go live this month.
Civil servants have yet to confirm when construction companies will be able to carry out end-to-end testing with the new CIS system.
Keeling added, “I understand they want much closer co-operation with all sides of the construction industry and with software developers.”