HMRC Consultation on Construction Industry Scheme – Have your Say

HMRC has published a consultation on proposed changes to the Construction Industry Scheme (CIS) which would reduce the threshold for smaller businesses and introduce mandatory online CIS filing for contractors. This follows the announcement in the March 2014 Budget that Government would seek to improve the operation of the scheme.

Currently, contractors that meet certain qualifying conditions can apply to be paid gross under CIS with no deductions taken from their payments. In order to achieve this, a contractor must pass a turnover and a compliance test. HMRC is aware that smaller limited companies often have problems with cash flow because they have to wait for end of year PAYE reconciliation before they can reclaim any CIS overpayments. It is these businesses in particular that could benefit from gross payment status to avoid waiting for HMRC to process tax repayments.

The consultation sets out HMRC’s proposals to make it easier for contractors to obtain gross payment status and to improve CIS online including:
– Decreasing the upper limit of the turnover test
– Simplifying annual compliance tests
– Making it easier to verify sub-contractors.

HMRC believes these changes will substantially reduce contractors’ administrative costs and provide small businesses with better control over their cash flow. However, in order to fully realise these benefits, HMRC would require all businesses to file all information online.

BWF will be responding to the consultation through the NSCC and members are invited to complete a short survey to give their views on the proposed changes. The survey should take no more than five minutes to complete and the results will be used to inform the NSCC response. More information on the consultation can be found here on the Gov.uk website.