CIPP Survey: Tackling abuse within the Construction Industry

11 June 2020

To support the CIPP’s written response to HMRC’s consultation on changes to the rules to prevent tax loss from the operation of the Construction Industry Scheme (CIS), the policy team has published a survey to collect your views. 

The survey aims to collect views and feedback on proposals to grant HMRC a new power to correct CIS deduction amounts claimed via Real Time Information (RTI) and on changes to existing rules, hopefully identifying any additional adjustments that could be made to tackle abuse of the CIS. The survey also asks for opinions relating to early ideas around construction supply chains.

The government recognises that most of the businesses within the construction sector meet their CIS obligations, in full and on time, however there are a minority of business that are abusing the rules by extracting cash from the tax system to falsely reduce their tax liabilities. By doing so, it allows them to gain an unfair cash-flow advantage over their competitors.  

From April 2021, HMRC will have the power to correct the amount of CIS deductions claimed on a sub-contractor employer’s return where they are identified as, or suspected of, claiming inaccurate amounts. Clarification on the law regarding “material deductions’ and ‘deemed contractors’ will also be implemented.   

A new provision will be introduced which will allow HMRC to correct the CIS deduction figures on a contractor’s EPS submission where there is no satisfactory evidence to support the claim. 

As well as correcting the EPS figures, HMRC will prevent the employer from the offset of further CIS deductions, against their employer liabilities, for the remainder of the tax year. Consideration to continue off-setting, after a correction has been made, will be made if an employer, after the event, provides evidence to support CIS deductions suffered. 

HMRC will apply interest and late payment penalties where the employer is late paying over corrected amounts. Employers will be expected to make payments which are due, on their next PAYE payment, following the correction. Payments will be due to be made on payment of PAYE following the correction. 

The CIPP recognises that, particularly at present, payroll professionals are extremely busy individuals, and would really appreciate it if you could spare the time to complete the survey to feed in to the future of the operation of the CIS, and to have your say. The survey will take approximately 20 minutes to complete, and will close on 31 July 2020.

CIPP comment - date for your diary

The policy and research team will be hosting a virtual think tank roundtable on 6 July that will enable HMRC officials to meet with CIPP members to discuss the details of this consultations and gather views and experiences. An invitation is to be send out in the coming weeks to all full, fellow and Chartered members. But to register your interest in advance please contact the team by email to [email protected].

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