The Construction Industry Scheme (CIS) stands at the core of the UK’s construction sector, playing a pivotal role in projects ranging from infrastructure development to housebuilding. Recognising its significance, the government is committed to ensuring that the CIS operates with ease of compliance and simplicity in administration, all while safeguarding the Exchequer.
In response to this commitment, the government embarked on a consultation journey, seeking feedback and suggestions for compliance and simplification proposals to enhance the CIS. The responses collected have been instrumental in shaping legislative changes set to come into effect from April 6, 2024, as detailed in the forthcoming Finance Bill.
One significant amendment involves the incorporation of Value Added Tax (VAT) obligations into the Gross Payment Status (GPS) compliance test. This change aims to strengthen compliance measures, providing HMRC with additional tools to swiftly address any breaches. The grounds for immediate cancellation of GPS will also be expanded to include VAT, Income Tax Self-Assessment (ITSA), Corporation Tax Self-Assessment (CTSA), and Pay As You Earn (PAYE). This targeted expansion aligns with industry feedback, focusing on combatting fraudulent activities without imposing undue burdens on legitimate businesses.
To further simplify processes, the majority of payments from landlords to tenants will be removed from the CIS scope. This addresses concerns raised by HMRC’s Construction Forum, particularly in scenarios where group companies, especially in the property sector, struggle with spasmodic CIS reporting obligations. The proposed grouping arrangement offers a solution, allowing a nominated company to submit a single return on behalf of the group, reducing administrative burdens and optimising efficiency.
In the spirit of digital transformation, the government is set to introduce digital applications for CIS registrations from April 2024. Telephone applications will be phased out, with postal applications remaining available for those digitally exempt. This shift towards digital is a step towards greater efficiency, paving the way for more streamlined and accessible processes.
As the government embraces change, it expresses gratitude to those who contributed to the consultation, both in written responses and roundtable discussions. The range of simplification suggestions received continues to be under consideration, emphasising an ongoing commitment to refining and improving the CIS.
In conclusion, the CIS reform reflects a balance between simplicity and Exchequer protection. These changes are designed to create a more resilient and responsive framework for the construction industry, fostering growth and compliance in equal measure. Stay informed, stay compliant, and join us on this journey of transformation in the construction sector.