Explain and critically examine the reasons why the Joint Contractual Tribunal 1998 has been amended from its original publication.

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Contractual Procedures II

Assignment 1

JCT 98, Amendments

1.        Introduction

  1. This report has been written, to explain and critically examine the reasons why the Joint Contractual Tribunal 1998 has been amended from its original publication.

  1. Since the Joint Contractual Tribunal issued the Standard Form of Building Contract, 1998 Edition, it has been amended 5 times with new clauses and sundry amendments.

  1. The amendments have been brought out annually since the Joint Contractual Tribunal issued the Standard Form of Building Contract, 1998 Edition was introduced.

1.4        In brief the amendments are as follows.

  1. Amendment 1, June 1999 - Construction Industry Scheme (CIS)

  1. Amendment 2 & Guidance notes, January 2000 - This amendment relates to the Contracts (Rights of Parties) Act 1999; Interim Certificates; Adjudication and Contribution, levy and tax fluctuations.

  1. Amendment 3, January 2001 - Terrorism cover/Joint Fire Code/Standard Method of Measurement

  1. Amendment 4, January 2002- Amendment covering extensions of time/loss and expense/advance payment

  1. Amendment 5 and Guidance Notes, July 2003  - Construction Skills Certification Scheme Organisation/Institution

  1. The amendments have been introduced for numerous reasons. They may have been introduced due to breaches or changes in the situations that affect the JCT. They may also have been implemented due to the introduction of other legislation that affects contractual procedures.

  1. Due to the style of the construction industry, changes occur regularly and new procedures, legislation and regulations have to be updated regularly. Not only during the construction phase are there important changes but also in all the politics and management surrounding the industry.

  1. The contractual preparation during the setting up and execution of construction projects is very complex, and due to constant changes in the environment and human evolution, situations change constantly. This calls for information literature and publications to be kept up-to-date.

  1. Amendment 1

2.1        Amendment number 1 of the Standard Form of Building Contract, 1998 Edition was issued June 1999.  

2.2        The amendment incorporated the Construction Industry Scheme (CIS). The Introduction of this scheme works in regards to contractors and sub-contracts.

Where a subcontractor holds a Registration Card, the contractor must make a deduction from all payments for labour of an amount on account of the subcontractor's tax and National Insurance contribution (NIC) liability.”

2.3        The CIS system is where contracts and sub-contractors are issued with a credit card sized registration card, which is issued by the Inland Revenue.

  1. Every project or job that they work on, they must supply the contractor with the information from the CIS card. This information is then used to pay the contract or sub-contract.

  1. Dependant upon which CIS card the contract or sub-contract has, derives whether or not they pay their own income tax and national insurance themselves.    

  1. This method is split into 2 processes: -

  1. Construction Industry Scheme (CIS) 4, when paying the sub-contractor/employee the employer/main contractor will deduct any statutory payments to government i.e. Income Tax at whatever the rate and National Insurance Contribution at whatever rate this is.
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  1. Construction Industry Scheme (CIS) 5, 6, is when the employer/main contractor pays the sub-contractor/employee in full. The sub-contractor then pays his or hers own Income Tax and National Insurance Contributions and any other statutory contribution. The sub-contractor/employee will probably have their own accountant, which sorts this out.

  1. Sub-contractors who obtain Construction Industry Scheme cards can be individuals/one man bands or they can be established companies, Limited Companies.

“To qualify for a Subcontractors Tax Certificate (CIS6), individual subcontractors have to have been up-to-date with their tax affairs during the previous three years and have had an ...

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