Legislation was introduced in 1970 to deal with payments within the construction industry where employment status does not exist. The legislation introduced a withholding tax which became known as C45 tax because the C45 is the form which evidences payment of tax. Subcontractors are entitled to exemption from the withholding tax where they fulfil certain conditions e.g. they have a fixed place of business and a tax compliance history. Such subcontractors are issued with a certificate known as C2.
A more secure form C2 was introduced for the tax year 1993-94et seq. The new C2 is a plastic card on which the subcontractor's photograph and signature has been encrypted. The new C2 has substantially reduced incidences of abuse. Where abuse is detected, it is followed up and appropriate action is taken, including, if appropriate, the withdrawal of the C2. I am satisfied that the C2 system is working well and that its security has been enhanced by the new procedures.