Explanatory note

These Regulations amend the Income Tax (Sub-contractors in the Construction Industry) Regulations 1975 (“the 1975 Regulations”) to allow certain contractors to pay the deduction imposed by section 559 of the Income and Corporation Taxes Act 1988 on payments to sub-contractors (“the statutory deduction”) to the Inland Revenue quarterly rather than monthly. The amended rules will apply to contractors whose avergae monthly payments of Pay As You Earn (“PAYE”), National Insurance Contributions (“NIC”) and the statutory deduction are expected to be less than £400 in total, and will apply to payments falling due after these Regulations come into force on 19th May 1991.

Regulation 1 provides for citation and commencement and regulation 2 contains definitions.

The remainder of these Regulations make amendments to the 1975 Regulations.

Regulation 3 provides for new definitions to be inserted in Regulation 2(1) of the 1975 Regulations.

Regulation 4 substitutes three new Regulations in the 1975 Regulations (Regulations 7, 7A and 7B) in place of the previous Regulation 7. The new Regulation 7A provides that a contractor who expects that his avergae monthly payments of PAYE, NIC and the statutory deduction will be less than £400 in total may pay the statutory deduction quarterly and not monthly. Regulation 7B contains further provisions relating to the payment of the statutory deduction by contractors, and these apply whether the statutory deduction is being paid monthly or quarterly.

Regulations 5, 6, 7 and 8 amend Regulations 8, 8A, 9 and 11 of the 1975 Regulations respectively to ensure that the 1975 Regulations apply to contractors paying quarterly as well as to those paying monthly.