The construction industry in the United Kingdom employs approximately 1.4 million people and includes 186,000 SME's. Now it is an arguable fact of any economy that one of the first signs of a healthy economy is a strong and vibrant construction industry.

Taking this into account I guess that means that things are on the up as far as the British economy is considered?

Well not necessarily as we have a small intermediate problem to get over called interest rates I suppose, but by and large, a vibrant Construction Sector is an indicator that things are getting better. The Logic here is that if people have money to pay for projects then they have money etc.

Now it is either this or you have a government pumping massive amounts into a recession hit economy trying get at least one of the key components working. The knock on effect being that if you get that working it will help jumpstart other parts of the economy as well.

The latter point may have some merit but the real issue is that, though the construction sector might be improving it is still faced with quite major issues. It has to overcome these in order to make sure that it is in a good enough position to move forward with confidence.

The industry has to develop a long-term strategy if it's to avoid the perennial boom and bust cycle that makes the industry re-active as opposed to pro active.

That having been said, according to PricewaterhouseCoopers in their recent global CEO survey, construction industry CEOs are more optimistic. This is good when you consider the issues that the industry is had to face in the last two to three years. One of the major issues as far as the SME sector was concerned about was compliance with the HMRC Construction Industry Scheme.

The idea of this scheme was to effectively root out employees masquerading as self-employed subcontractors and as a result avoiding NIC and Tax Payments.

Now this is an issue that the construction industry has had massive problems with over the years and to be fair as an industry it is cleaning its act up.

Gone are the days when smaller construction companies could turn a blind eye to regulations and hence almost pay employees on a cash in hand basis and by default remove themselves from their obligation to pay the relevant tax and national insurance.

The new scheme which was fully implemented in April 2007 has imposed an additional burden on policing tax status on employers who are already disappearing under considerable amounts of red tape. Every employer / contractor will have to make a monthly return within 14 days of the month end.

In this return they will have to include all the pertinent details of payments to subcontractors and details of any deductions from payments to subcontractors. This will act as a form of declaration confirming that employment status has been considered and a declaration that the verification process has been applied correctly.

The final kicker as far as employers are concerned is that if they file their returns incorrectly or late they get hit with a fine. An incorrect return effectively makes the employment status incorrect so it is important to get the information right first.

As per usual The Inland Revenue were very quick to point out that actually this is an already existing requirement and shouldn't be considered an onerous task as the information should already be in existence.

Yeah right.

Scott James writes about a number of Internet Marketing based issues such as Construction Software. More information from Scott can be found at Accounting Software and also CIS