The Income Tax (Sub-contractors in the Construction Industry and Employments) (Amendment) Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993 (S.I. 1993/743: “the Sub-contractors Regulations”) and the Income Tax (Employments) Regulations 1993 (S.I. 1993/744: “the Employments Regulations”).

Regulation 1 provides for the citation and commencement of these Regulations.

Regulation 2 introduces the amendments to the Sub-contractors Regulations.

Regulation 3 inserts a reference to “relevant liabilities”, as defined by section 559A(4) of the Income and Corporation Taxes Act 1988 (c. 1: “the Taxes Act”), in the list of defined expressions in regulation 2(2) of the Sub-contractors Regulations.

Regulation 4 substitutes a new paragraph (2) in regulation 9 of the Sub-contractors Regulations, allowing an employer which is a company to take into account amounts deductible by others for whom it has worked as a subcontractor, on account of its relevant liabilities, in determining whether its is entitled to account to the Collector quarterly in respect of sums deducted by it from payments to its own sub-contractors.

Regulation 5 amends regulation 10 of the Sub-contractors Regulations, inserting a new paragraph (4A), the effect of which is to protect the position of a sub-contractor which has had a sum deducted under section 559 of the Taxes Act, but which the contractor has not paid over to the collector of taxes.

Regulation 6 inserts a new regulation 41A into the Sub-contractors Regulations, providing for the inspection of the records of a sub-contractor where sums, deducted by others from payments due to it, fall to be applied against its liabilities for tax, national insurance, student loan recoveries, overpaid social security benefits, tax credits and sums which it has itself deducted under section 559 of the Taxes Act.

Regulation 7 inserts new regulation 44B prescribes the order in which sum deducted under section 559, and paid to a Collector of Inland Revenue, are to be applied by the Commissioners of Inland Revenue (“the Board”) in discharge of relevant liabilities.

Regulation 8 amends regulation 41 of the Employments Regulations in respect of the quarterly payments of PAYE tax, allowing the same liabilities and payments to be taken into account in determining whether an employer may account quarterly for PAYE tax as are to be taken into account in determining whether he may account quarterly in respect of sums deducted under section 559 of the Taxes Act.