CIS and CDM: the regulatory double whammy of 2007
Certain years stick in the memory: 1066 and 1966 are
notable examples. It is no different for the construction industry
– 1963, 1980 and 1998 will be forever associated with the JCT
contracts (as will, no doubt, 2005 in time).
That being the case, 2007 may go down as the year when the
industry experienced two seismic events in terms of regulatory
changes. You may already be aware that on 6 April this year, the
new Construction, Design and Management (CDM) Regulations and
Construction Industry Scheme (CIS) both came into force. After a
few short months, what are we to make of these new kids on the
legislative block?
The CDM Regulations apply wherever there is ‘construction work’;
in short, the Regulations apply to most building, engineering or
civil engineering work. The Regulations place additional duties
upon employers, contractors, designers and other defined duty
holders on all projects, with additional specific duties on
projects lasting more than 30 days or which involve more than 500
person days of construction work. The Health and Safety Executive
has taken the view that the new Regulations reflect current best
practice. The Regulations are designed to oblige everyone involved
on a project to manage health and safety issues from even before
work commences on site. However, there is some scepticism in the
industry as to whether the Regulations will actually decrease the
number of accidents suffered by workers.
The new CIS is relevant to the payment of self-employed
sub-contractors. Its aim is to prevent tax evasion. Under the
Scheme, contractors are now specifically responsible for checking
the employment status of sub contractors, who are themselves
obliged to register with HM Revenue and Customs (HMRC) so that they
can be taxed at the appropriate rate. There has been some confusion
about whether sub-contractors are deemed to be "employed" in which
case the PAYE scheme will apply rather than the CIS. Recent
employment case law suggests that HMRC is able to make
retrospective assessments of which scheme to apply, which could
have significant consequences for contractors.
Blake Lapthorn is able to offer advice on the risks of
sub-contractors being deemed to be "employees" and how to mitigate
those risks.
For further information please contact Kevin Barrow on 020 7814
5423 or email kevin.barrow@bllaw.co.uk or
Frances Lewis on 020 7814 5495 or email
frances.lewis@bllaw.co.uk
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