A recent communication from the SDST highlights a proposed HMRC change to the deduction of the CITB Levy with effect from April 2014:

The Construction Industry Training Board (CITB) is an industrial training board responsible for promoting vocational training in the construction industry. It is empowered, by statute, to impose a levy on employers or contractors in the industry to fund its operations. These include making grants to employers and/or contractors whose training courses are approved by the CITB.

Contractors often seek to recoup this outlay from their subcontractors in the form of a deduction made from the gross invoice payment due to a subcontractor. This deduction has traditionally been excluded from the ‘Gross amount of payment’ shown on a contractor’s monthly return.

Historically, since the introduction of the CITB levy many years ago, HMRC has accepted this practice, even to the extent of explaining it in its published guidance booklet ‘CIS340 – Construction Industry Scheme. Guide for contractors and subcontractors’.

HMRC has recently reviewed this long-standing practice and has reached the conclusion that it can no longer be supported as it is not a part of the current, or past, CIS legislation. Consequently, HMRC proposes to amend its guidance in booklet CIS340 from April 2014 to remove all references to the practice.

We expect software developers who have built in the facility for the levy to be catered for in this way either to remove this from the software package entirely or to change the package to ensure any such CITB deduction is taken from the subcontractor’s net payment, after the calculation of the CIS deduction. We would like to hear from developers what issues this may cause for them or their customers, if any.

Provide your input on the BASDA HR & Payroll LinkedIn Group by 24 October 2013.