Tax Information Sheets for Schools

Changes to the Construction Industry Scheme from 6 April 2007

Advice for Head Teachers and Finance Officers

Maintained Schools

From 6 April 2007, the CIS scheme should not be operated for payments made for construction operations by the governing body or head teacher of a maintained school on behalf of the education authority.

This result of this is that where:

• construction operations are administered directly by the governing body or head teacher of a maintained school


• the money has been made available by Norfolk County Council (eg formula capital)


• the payment is made on or after 6 April 2007

a maintained school should pay its contractor directly, and does not have to apply CIS regulations.

The transition period

Schools should continue to send cheques and invoices to reach NCC before 31 March 2007. The Purchase to Payments team is aiming to process all invoices received by 31 March before 5 April. Where invoices cannot be dealt with in this timescale, schools should hold the invoices and make payments on or after 6 April. If cheques and payment requests are received by the NCC Purchase to Payments team after 5th April, they will be returned to the school which should then make a payment directly to the subcontractor.

Subject to the note below, the CIS scheme will continue to apply as before in the following cases:

• Construction operations paid for by the governing body or head teacher of non-maintained schools


• Construction operations where payments are made by Norfolk County Council (or NPS as agent for NCC)


• Construction operations where the funding is not provided by NCC

Note: the CIS scheme is changing and from 6 April 2007 there will no longer be physical CIS cards/certificates. Instead, subcontractors must be registered with HMRC and the contractor must verify certain information with HMRC before making a payment. Please call contacts below for further information.

Employment status:

HM Revenue and Customs is using the new CIS scheme to remind contractors of the importance of considering employment status before employing a sub-contractor. Where a school has any doubt as to whether a contract they are proposing to enter is in the nature of employment rather than self employment (see common indicators of employment below), advice should be taken in order to avoid potentially expensive tax charges.

Common indicators of employment (further details can be on the HMRC Website)

• The contractor has the right to control what the worker has to do - where, when and how it is done - even if the contractor rarely uses that control.


• The worker supplies only his or her own small tools.


• The worker does not risk his or her own money and there is no possibility that he or she will suffer a financial loss.


• The worker has no business organisation, for example, a yard, stock, materials, or workers. (These examples are not exhaustive).


• The worker is paid by the hour, day, week or month.

Contact:
Howard Jones, Tax Manager, telephone number 01603 22 2832
Sarah Blyth (Purchase to Payments Manager), telephone number 01603 49 5796