HMRC publishes response to the consultation: Changes to tackle Construction Industry Scheme abuse

13 November 2020

HMRC recently published a consultation that assessed the ways in which abuse within the Construction Industry Scheme (CIS) could be tackled. It has now published its response, and the accompanying draft legislation.

The consultation gave details of a new power, which would allow HMRC to correct CIS deduction amounts claimed by sub-contractors on employer returns, it also set out changes to a number of the CIS rules to either confirm their meaning or expand their scope, and it discussed preliminary ideas on construction supply chains, assessing whether they could help to prevent tax loss.

The consultation response confirms that the Government will legislate to provide for:

  • The power to allow HMRC to make changes to certain CIS deduction claims on employer returns
  • Amendments to current rules on the cost of materials and deemed contractors
  • The expansion of the scope of the CIS false registration penalty

From the findings of the thinktank roundtable meeting and the survey that the CIPP ran, which formed part of our response, it became apparent that many of those impacted believed that the proposed 14-day period which a subcontractor has, to provide evidence of a genuine deduction, was too short. HMRC has listened to the concerns raised, and has confirmed that, should the 14-day timeframe not be realistic, then sub-contractors may liaise with HMRC to agree on a mutually acceptable timeframe in which to make the correction.


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