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A technical hitch by HM Revenue and Customs left contractors unable to use the online system of the revamped Construction Industry Scheme (CIS) this week.

It has emerged that on Tuesday, the first day the system was live after its Good Friday launch, computers at the Revenue were turned off because the air conditioning system was not working. As a result contractors were not able to use the new software to validate the status of their subcontractors online, which was the purpose of the scheme.

A spokesperson for the Revenue said: 鈥淒ue to a problem with air conditioning at one of our data centres we were experiencing difficulties with our online services. We regret any inconvenience that that caused.鈥� She added that the system was working again on Wednesday.

The CIS is the biggest shake-up of the construction tax system for eight years. The checks determine if subcontractors are employed or self-employed so employers know whether their salaries should include tax.

A Construction Confederation spokesperson chided the Revenue: 鈥淚t is very disappointing because there is a danger of people losing confidence in the system and their own ability to use that system. We are hoping this doesn鈥檛 happen again.鈥�

Other industry sources said this would undermine the changes to the scheme and inconvenience contractors who have long been concerned about not being fully prepared: 鈥淭his has caused a lot of frustration and a lot of confusion,鈥� said one. 鈥淭his does not help to build confidence in the system.鈥�

There is a six-month grace period in which the Revenue will waive mistakes, but after that fines will be imposed for failure to comply or filling in forms incorrectly.

If this system meltdown had occurred after the six-month period, contractors would have been told to automatically deduct 20% and subcontractors would subsequently have to claim back causing cashflow problems.
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