Thousands losing gross tax status

Thousands of workers have been affected by tough rules imposed by HMRC to submit tax return forms on time, under the Construction Industry Scheme (CIS).

According to construction industry news website, Contract Journal, the workers are being left in limbo after their employers' gross status is revoked.

This forces the companies, which also start facing construction work shortages, to pay the contractors net of tax. This, in turn, causes cash flow problems for the workers, it said.

The problem has prompted tax experts to urge HMRC to reconsider its stand.

Howard Royse, a CIS tax representative at the Institute of Chartered Accountants, said: "Thousands of firms have lost their gross status and our belief is that one in three firms is now falling foul of the system."

"We want to show them the other side of the coin and the problems contractors in that situation face", he added.

They are now gathering evidence to show the effects of the revocation to HMRC.

CIS mostly applies to construction workers and outlines payment guidelines in the construction industry.