A lawyer representing a firm who successfully appealed against paying the construction training levy is predicting that the outcome will encourage other companies to fight against paying the annual charge.
The levy is applied to all liable employers by the CITB-Construction Skills, based on their size. However the legislation defining the types of businesses that are legally obliged to pay the levy, is far from clear cut said Stuart Thwaites, a senior associate at Midlands law firm, Wright Hassall.
Wright Hassall lodged an appeal on behalf of a multi-national client which supplies and installs shelving and display furniture for supermarkets as they felt its operations fell outside the definition and objected to paying the levy.
The client, who does not want to be identified, had been asked to pay £85,000 per annum.
“This is a very significant outcome because it demonstrates the extent to which there is a ‘grey area’ in the legislation that goes with this levy,” said Mr Thwaites.
“In the first instance this particular client was told they were not subject to the levy but a year later they were, leaving them with no option but either to pay the levy year on year, or appeal.
“We spent a year putting a number of submissions together in order to argue that the CITB should accept that this company is not subject to the levy.
“Everyone involved was delighted with the result as it will represent a major year-on-year saving.
“This is a very rare result and as this form of case is not generally published in law reports I think it is important that other businesses are made aware of this.”
“Main contractors and other businesses that are clearly involved in ‘constructing’ buildings and infrastructure would be hard pressed to argue against the levy,” added Mr Thwaites.
“But there are many ancillary businesses, particularly those in the interior fittings industry, where applying the definition is not so clear cut.
“Given the cost of paying the levy can run to many tens of thousands of pounds, any company that falls into this grey area would do well to consider challenging their obligation to pay.
"The CITB may have to prepare themselves for an increased number of appeals and the first thing they will need to do is to clear up the legislation and eliminate such grey areas, as well as ensuring that the assessment process is fair.”
CITB- Construction Skills played down the row. A spokesperson said:” It’ s a simple case. The company’s structure and operations changed and it no longer fell within the scope of having to pay the levy.”
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Would someone please explain to me why as a manufacturer of kitchens we should be paying the CITB levy. As a company since 1961 we have never built anything. We are a manufacturer. The CITB have no training to offer us. This is simply a totally unfair random TAX. Creating a completely unfair advantage to companies that have not been ‘Caught’. It seems that it is totally random, I’ve heard of building companies that don’t pay any levy, and very small kitchen suppliers that do pay. For nothing!!! IWe would really appreciate any advice . Do please contact us if you’ve had any experience or success fighting this quango. We need to fight this unfair TAX.
The CITB, we as small companies should not have to pay, its a rip off, if you don’t use the CITB, why should we be bullied into paying “
In the 2017 CITB Levy guidance notes the claim is that the new scheme of using the total tax deducted from the CIS returns will not cost companies any more in Levy charges.
(Under the old scheme the Levy was based on Labour only subcontractors).
Most of our subcontractors are classed as gross paid. The remaining are taxable at 20% labour and materials or pure labour. Under the old scheme we would have only had to pay a Levy on labour sub-contractor payments of £23,487 (x the old rate of 1.5% = amount liable £352.30). Under the new scheme, with the labour and material subcontractors now dragged into the calculator our total payments made leap to £196,324 giving us a Levy bill of £2,454!
I am sure we are not the only company finding this.
Why are SME’s being taxed to death at every angle, when all we are doing is trying to make a living and create jobs.
I have used the CITB to put a young lad through his apprenticeship ten years ago. The grant helped to cover some of the cost over the three years but hardly compensated me in real terms of what I had to put in time wise in training the lad.
He is still working for us now and is a great asset but that is not done to the hep from the CITB.
I have never claimed from them again and never will, I feel that we are being bullied into paying another TAX on our hard earned money.
Please tell me why we have to pay this feet help other people get trained at our expense!!
I too am very frustrated with the CITB levy, I am small company (one man band), I want to know what am I paying for, I don’t use ant citb for training, I asked them to pay for a scissor lift course and a pasma course which I need and so do my subbies, but that isn’t something the levy covers, SO WHAT DOES IT COVER, WHY DO WE HAVE TO PAY!!!
The CITB levy is a disgrace and at the last few forums the CITB have struggled to provide any worthwhile information or input into the construction industry. I truly struggle to understand how businesses voted in favour of keeping the CITB. The levy is nothing more than an extra tax on businesses. The grant claim system is so confusing and time taking. Get rid of them!
Can anyone help?
My business operates in Medical, Logistics, Education and Construction of which Construction represent around 38% of my revenue. Do I have to pay CITB!!??
This levy is a joke. We spotted an article/advert saying that we could apply for a grant to help us with training. Having no ’employees’ ourself, we decided to ask some of the lads on site (none of them directly employed by us- all subbies!) if they might like to do some training. The following year we were told we had to pay the Levy for the first time, which outstripped the amount we had originally claimed by hundreds of pounds. Now we are hounded every year. I really wish we had never seen the advert and taken forward the training. It is a con!!
This levy is totally unfair, being a small roofing company with 1 employee and having 3 sub contractors we have to pay the levy as 8 years ago we employed a 17 year old who we sent on a roofing course (just trying to help him out in life) he did half the roofing course and then jacked it in and left us as he decided he didn’t like roofing any more so we have had no employees trained and we have not asked for any grants or training ever since and yet every year we get hounded.
If every year we asked for grants then fair play but we do not.
We are 1 of around 10 roofing companies in a small town and only one other pays the levy the rest don’t so how is that fair when they can keep all their profit, it makes us less competitive as we have to add the levy onto our quotes so that we make the same profit as the rest which means we don’t win as many jobs, this on top of the firms that don’t use scaffolding that we have to compete with.
Unless every single roofing company in England has to fill out a levy form then this is a joke you can’t just pick who does and who doesn’t, i rang the CITB and said this and they said if there are firms that don’t pay send their name and number to us, surely if it is law then the CITB should be doing this themselves.
The cost to small Companies that have to pay the Levy is extremely unfair.
The CITB should be encouraging training. You cannot afford to send your workforce on training courses because of this levy cost & a lot of Companies train in-house but never claim.
I do think that the threshold for Companies having to pay the Levy should be higher so excluding Companies with a smaller turnover. It is just an added overhead cost & a tax that the smaller Companies can ill afford.
It would also seem that some Companies do not pay & are under the CITB’s radar so again unfair to other Companies who do pay.
The CITB are crippling SME’s with this TAX.
SME’s that would normally use any spare cash to invest in the training of staff are not doing so because they have to hand it over to CITB.Thus resulting in NO training being given.