HMRC Construction Industry Scheme Reform Consultation

HMRC has initiated an important consultation regarding potential reforms to the Construction Industry Scheme (CIS). The consultation period began on 27 April 2023 and will run for 12 weeks, concluding on 20 July 2023.

This is your chance to contribute your valuable insights and opinions on the proposed changes.

Complete the CIS consultation questions

The previous CIS consultations in 2017 and 2020 highlighted concerns related to labour fraud in the construction sector and abuse of the scheme. HMRC is considering significant reforms to combat these issues and seeks to strike a balance between revenue protection and reducing administrative burdens where possible.

Key Areas Under Consideration in HMRC Construction Industry Scheme Reform Consultation

VAT Compliance

VAT obligations are not factored into the compliance test for subcontractors to receive or retain Gross Payment Status (GPS). The consultation explores the recommendation to include VAT in the compliance test, addressing potential implications and barriers to the timely submission of returns/payments.

Please note that the proposed change on VAT Compliance by subcontractors will not have a direct impact on contractors’ obligations under the Scheme; however, this could potentially affect the number of subcontractors achieving gross payment status. Therefore, your views on this and the other reforms would still be welcome.

Reverse Premiums

A distinction between landlord and tenant payments has caused confusion, leading to cash flow problems for tenants and uncertainty for landlords. The proposal suggests treating both types of payments as outside the scope of CIS to resolve these issues.

Multiple Reporting Requirements

This aspect primarily affects groups of companies with onerous CIS reporting requirements. While it may not pertain to all, the consultation invites views on potential changes.

Further Simplification of CIS

The government is keen on enhancing the scope and administration of CIS by seeking suggestions for simplifications and improvements. The aim is to leverage online platforms for increased CIS compliance.

Your input is crucial to shaping the future of the CIS

HMRC has posed specific questions related to VAT compliance, reverse premiums, preferred channels of application, and opportunities for simplification. If you would like to share your views via PSTAX, please provide your comments and answers to the questions by 18 July.

Participating in this consultation is an excellent opportunity to influence policy decisions and contribute to a fair and efficient construction industry. Your expertise and feedback matter, so we encourage you to take part in this consultation and make your voice heard.

For more information and to access the consultation document, please visit our website. Don’t miss this chance to have a say in the CIS reform process.

Complete the CIS consultation questions

Learn more about Construction Insurance Scheme

Sudeep Ganguli

Written by Sudeep Ganguli

After graduating, Sudeep joined HMRC before moving to EY as an employment taxes specialist. In 2000, he began specialising in public sector tax issues, working with Duncan Groves and Nick Burrows. Before joining PSTAX in 2019, Sudeep was an Associate Director at RSM.

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