MEDIUized building and construction firms could face ruin as the result of a tough policy being imposed by the Inland Revenue.

That is the verdict from Mr Alan McCann, tax director at Bury-based business advisers DTE.

He says many companies are at risk due to the Inland Revenue's hard line on renewing construction industry scheme (CIS) tax exemption certificates. Mr McCann's warning follows the Inland Revenue's refusal to renew several CIS certificates as a result of a recent tax law case.

He said: "It is more important than ever that businesses in the construction and allied industries deal with their tax compliance requirements correctly and on time."

Directors of many medium-sized firms are not aware that even slightly late payment of their monthly PAYE or NIC remittance could jeopardise their CIS certificate renewal.

Mr McCann added: "Trying to bring matters up to date just before the application is a high-risk strategy. If your CIS certificate is due for renewal within the next 12 months, action is required now." The CIS gives three types of certificates.

Mr McCann says he believes believe the Inland Revenue is being far too punitive in its actions following the test case.