Draft Income Tax (Construction Industry Scheme) (Amendment of Schedule 11 to the Finance Act 2004) Order 2016

Rob Marris Excerpts

Tuesday 8th March 2016 General Committees

[Rob Marris (Wolverhampton South West) (Lab)]

It is a pleasure to appear before you, Ms Dorries—it is a pleasure I have not previously had.

Naturally, Labour shares the Government’s goals of reducing unnecessary administrative burdens on business and of helping small businesses, and they are the focus of the order. I look around the room, and one or two of my hon. Friends are old enough to remember the lump in the construction industry that existed when I entered the labour force. We then had the 1971 construction industry tax deduction scheme. I did not remember the dates, so I looked them up, but from April 1977, we had the old 714 certificates, the 715 vouchers and SC60s and so on. I remember learning about them in law school. We then had the construction industry scheme, which today’s order seeks to amend and which began in August 1999.

At that point, the turnover threshold was £30,000, as the Minister will remember. The scheme was then reformed. The reforms took some time to come through, but they began in April 2007, so here we are almost nine years on making another amendment. The Minister will be relieved to hear that, as part of the research that my excellent researcher, Imogen Watson, and I undertook we spoke to the Union of Construction, Allied Trades and Technicians—UCATT—which does not have concerns about the instrument, and that shortened the research time I felt it necessary to spend on the instrument.

I understand that the statutory instrument is one of a series of five or possibly six. It seems to be the fifth in a list in the tax impact note of 10 December 2014, although it is the fourth to be passed. I gather that there will be another statutory instrument that reduces the turnover threshold for eligibility for the scheme from £200,000 to £100,000. Perhaps the Minister would say a couple of words about that, or correct me if it has already happened. Perhaps he would kindly confirm when the missing SI—the other one on the list of five—will be placed beside the turnover-reducing one. I understand that it will be next month.

My understanding is that the statutory instruments are part of a wider HMRC and Treasury plan to introduce mandatory online filing for construction industry scheme contractors and, in that sense, the free online software and pre-populated forms have been useful to small businesses, as the helpful Library note from 2011 indicates. I found intriguing what the tax impact note says about the fact that some people do not wish to do online filing on religious grounds. I concede that that was a new one to me—that is my ignorance. Perhaps the Minister would elucidate it a little for me and, I suspect, some other hon. Members. It is slightly concerning when we are trying to move to a more efficient online system, but people’s religious beliefs have, of course, to be respected, and the Government are doing that.

In the tax impact note of 10 December 2014, two figures seem to be given for the number of businesses affected—90,000 and 40,000. I think that the Government anticipate that it is the latter figure that will be affected by the package of measures, including today’s statutory instrument, but perhaps the Minister would clarify that. If the figure is not 40,000, perhaps he would say what the Government estimate it to be.

I realise that the explanatory notes do not form part of the statutory instrument, but they say that the tax impact note of 15 months ago still holds good:

“It remains an accurate summary of the impacts that apply to this instrument.”

However, the still-effective tax impact note itself says on page 3:

“Estimates of the impact on businesses will be established and published once details of the measure have been finalised.”

Would the Minister tell us whether those estimates have been established and published? I have not been able to find them, but that might be to do with my research capabilities.

On the same page, the note refers to the costs of the changes:

“HMRC will incur costs to make changes to, or introduce new, IT systems to enable improvements to the CIS scheme.”

Would the Minister tell us whether the package of statutory instruments and measures to change the CIS scheme will lead to a need for new IT systems or alterations to existing ones, and what the costs are likely to be?

Naturally, when any Government introduce changes to a scheme, at a certain point thereafter they ought to make an assessment of the effectiveness of the scheme and the changes, and whether they have produced the desired outcome. Would the Minister say when the Government might be able give an indication of the effectiveness or otherwise of the changes made—a year down the road, two years down the road, and so on? As I said earlier, the scheme has been changed quite a lot over the years. In that context, what would be the Government’s measurement or, as we say these days, metric for success in terms of whether the package of changes has produced broadly the types of improvement for small businesses that we all want?