Insurers could face fines of more than £1bn under the Construction Industry Scheme (CIS) if a ruling from the Inland Revenue proved valid, warned Multiassistance.
The CIS, introduced in 1997, ensured that National Insurance payments were collected on behalf of all construction sector employees, but had not been thought to apply to insurance sector repairers, said the company.
Multiassistance said it instructed solicitors Eversheds to investigate CIS and its application to insurer-funded repairs in 2002.
In January 2004, the Inland Revenue ruled that all work undertaken by Mulitassistance on behalf of insurers where monies were paid directly to a builder were liable to CIS processing.
Multiassistance said it was now lobbying to ensure regulators enforced this ruling.
This ruling contradicted the popular perception within the insurance industry that CIS processing did not apply, as payments direct to builders were made to avoid fraud; a justification to exempt repair payments from CIS, said the company. The Inland Revenue has ruled this perception is wrong and that CIS does apply.
Multiassistance sales and marketing director James Grant said: “We are disappointed with the ruling as payments to builders are made to prevent fraud. The company now fully complies and is offering contractual indemnities to corporate clients.”
The property repairer network said the ruling would inevitably increase costs of risk and supplier management.
