The Income Tax (Sub-Contractors in the Construction Industry) Regulations 1988
These Regulations, which amend the Income Tax (Sub-Contractors in the Construction Industry) Regulations 1975, and which come into force on 19th April 1988—provide that, where a contractor has failed to make the appropriate deduction from a payment made to a sub-contractor but the Inspector is satisfied that the sub-contractor was not liable to tax or has made a tax return which took account of those payments and has paid any tax and Class 4 Social Security contributions due thereon, the Inspector, at the request of the contractor, is to direct that the amount undeducted shall not be recovered from the contractor; and provide a right of appeal for the contractor where the Collector has refused to make a direction that an amount undeducted by a contractor shall not be recovered from the contractor who claims that the failure to deduct was due to an error made in good faith or that, in spite of reasonable care, he was led to the genuine belief that the deduction was not required (regulation 3);extend the provisions for the inspection of sub-contractor payment records enabling an authorised officer to inspect such records at such time as he may reasonably require at an agreed place, or in default of agreement the place where the records are usually kept, or, if there is no such place, the contractor’s or sub-contractor’s principal place of business, as the case may be; and permit the officer to take copies of, or remove, documents (providing copies where the documents are reasonably required for the proper conduct of a business) (regulation 4);provide for interest to be payable on amounts liable to be deducted but unpaid by contractors to the Collector which are the subject of an assessment under regulation 12 of the Sub-Contractors in the Construction Industry Regulations; the interest will run from the 19th April after the fiscal year to which the assessment relates until payment (but will not run from any date earlier than 19th April 1988) and will be at the rate applicable to unpaid tax; the interest will be recoverable in the same way as amounts assessed under regulation 12 and unpaid (regulation 5);extend the provisions for the inspection of contractors' records relating to certificated sub-contractors and payments made to them by enabling an authorised officer to inspect such records at such time as he may reasonably require at an agreed place, or in default of agreement the place where the records are usually kept, or, if there is no such place, the contractor’s principal place of business; and permit the officer to take copies of, or remove, documents (providing copies where the documents are reasonably required for the proper conduct of a business) (regulation 6);provide that where, by reason of an issue or transfer of shares to a person who was not a shareholder immediately before the issue or transfer, there is a change in the control of a close company which is a private company limited by shares and which holds, or has applied for, a sub-contractor’s certificate, the company shall, within 30 days of the issue or of receiving information as to the transfer, furnish the Inspector with the name and address of the person to whom the shares were issued or transferred (regulation 7).