We have received advice from Liz Bridge who runs the Joint Taxation Committee, is a Tax Judge and sits on the CITB Levy Panel. Her advice is set out below;
Some firms insert a clause into their contractual terms which allow them to make a deduction for training costs of say 1.25% of the amounts payable to a subcontractor. This deduction must be made plain when subcontractors are tendering for work so no one can say it was sprung on them after the work was done. If it is not in the original contractual terms, any deduction would amount to short payment. The clause must make no reference to being in respect of the CITB Levy because it is not legal for employers to pass on their obligation to pay the Levy to any worker.
A note of caution – It is generally reported that subcontractors tendering to firms making such a deduction for training will inflate their tender price to recompense themselves for the deduction. There may also be resistance from subcontractors who are gross paid under CIS because they may know that no Levy is paid for them. Equally, there may be resistance from subcontractors who are themselves subject to CITB Levy because there is no set-off in the new Levy scheme and they will reason that they are paying twice for training.
Whilst it is possible, it isn’t always best practice.
We would like to remind FIS members that they are eligible to contact Liz Bridge or the Womble Bond Dickinson legal construction team, both services are free and can be found in the Membership Hub here.