HMRC Proposed Changes To Tackle CIS Abuse

A new policy paper has been published by HMRC, covering a range of amendments to the Construction Industry Scheme (CIS), taking effect from the 6th April 2021. These amendments grant new powers to HMRC ...

They allow it to amend the CIS deduction amounts that sub-contractors claim on their Real Time Information (RTI) returns. This power will be used to correct errors and omissions. It will also allow HMRC to remove claims and even to prevent certain employers from submitting similar claims in future.

These changes also cover:

- Cost of materials - From April 2021, only direct costs incurred by a sub-contractor are not subject to a CIS deduction

Deemed contractors - The rules are changing for determining which entities outside of the construction sector need to register for CIS as deemed contractors. Expenditure will need to be monitored regularly and CIS will apply when construction expenditure exceeds £3 million in the previous 12-months

CIS registration penalties - The scope for penalties will expand when supplying false information or making fraudulent deductions within the CIS. Both individuals and companies are now liable if they exercise influence or control over the person making the claim

These changes may seem like they could cause a lot of trouble for businesses operating under the CIS; however, HMRC is using them to formalise the rules and close-up some loopholes, ensuring everyone understands what is expected of them when using the Construction Industry Scheme.

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