Revenue & Customs' Construction Industry Scheme has come under fire for problems a year after its relaunch. The new scheme requires payments from contractors to subcontractors to take account of the subcontractor's tax status. This usually requires a 20% deduction, paid directly to the Revenue. But Peter Mitchell, chairman of the Society of Professional Accountants, says the withdrawal of 'gross payment status' has hit subcontractors hard. He added that 'draconian' action was being taken by Revenue staff for small infringements 'without consideration of the effect of their actions on those at the sharp end'. One small practitioner said a contractor client, after submitting a monthly return by computer, was served with 40 penalty notices in a few days. But a Revenue spokesman said he did not believe large numbers of penalty notices were being issued in error. He said there had been a small number of cases where penalties had been imposed after returns were sent in on time without their identifying reference number. 'Once we have identified the owner of these returns and can see that it was received by the due date, the penalty is cancelled,' he added.