Verification
The
contractor will have to contact the Revenue to check whether
to pay a subcontractor gross or net. Not every subcontractor
will need verifying. Usually it will only be new ones.
The verification procedure will establish which of the following
payment options apply:
- gross
payment
- a
standard rate deduction of 20%
- a
deduction made at the higher rate (confirmed as 30% in the
2006 Pre-Budget Report) if the subcontractor has not registered
with the Revenue or cannot provide accurate details to the
contractor and the Revenue cannot verify them.
The
Revenue will give the contractor a verification number for
the subcontractors which will be matched with the Revenue's
own computer. The number will be the same for each subcontractor
verified at any particular time. There will be special numbers
for subcontractors who cannot be verified. The numbers will
have to appear on contractors' monthly returns and payslips.
Clearly, these numbers are a fundamental part of the new system
and contractors will have to ensure that they have a fool-proof
system in place for obtaining and retaining them. It will
also be very important to give precise details to the Revenue
because, if their computer does not recognise the subcontractor,
the higher rate deduction will have to be made.
We
would welcome a call or email if you have any questions on
anything we have covered in this newsletter.
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C o m p l e t e
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to carry on audit work for a range of investment business
activities by the Institute of Chartered Accountants in England
and Wales