HMRC launches a consultation in relation to tackling Construction Industry Scheme abuse

24 March 2020

HMRC has launched a consultation that seeks views on changes to the rules to prevent tax loss through the operation of the Construction Industry Scheme (CIS).

HMRC would like to hear from individuals who work within construction, those who operate within the CIS, and anyone representing construction businesses. HMRC is particularly interested in hearing from sub-contractor employers who set off CIS deductions in-year against their employer liabilities, and from larger contractors at the top of supply chains, who would be most impacted by proposals relating to supply chains.

It was announced at Budget 2020, that from April 2021, HMRC will have the power to correct the amount of CIS deductions claimed on a sub-contractor employer’s return, in scenarios where they identify or suspect that inaccurate amounts have been claimed. Other changes include clarifying the law regarding the CIS rules on ‘materials deductions’ and ‘deemed contractors’. The government is also considering whether to introduce measures to improve the information available to HMRC in relation to construction supply chains and to encourage contractors to undertake supply chain due diligence to support CIS compliance by all parties within a chain.

The consultation seeks input in three key areas:                 

  • Feedback on the measure designed to ensure CIS deductions claimed by employers are permitted only where there is satisfactory evidence to support them, particularly on the implementation of the proposed provision
  • Other ideas, or rules within the CIS that could be clarified, to minimise misinterpretation and abuse
  • Feedback on the supply chain measures which are at an early stage of development

The consultation will run for a period of ten weeks, commencing on 19 March 2020 and finishing on 28 May 2020.

CIPP comment

If you have any feedback on any of the topics covered within HMRC’s consultation: Tackling Construction Industry Scheme abuse, then please get in touch with the Policy team, at [email protected]. As always, the voice of our members is of paramount importance to us so we value all of the responses and opinions that we receive.


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