HMRC is making some changes to the CIS legislation in a bid to help tackle abuse of the construction industry scheme, these will come into effect from 6th April 2021.
There are four main changes which you should be aware of:
1. CIS set-off Amendment Power
HMRC will have the power to amend the amounts claimed by subcontractors on their (RTI) EPS payroll submissions. This is so that HMRC can correct errors related to the claims, remove claims and prevent certain employers from making further similar claims where they have not provided evidence of eligibility or sums deducted and have not corrected their RTI payroll submissions at HMRC's request.
2. Cost of materials
These measures clarify that only when a subcontractor directly incurs the cost of materials purchased to fulfil a construction contract that the cost in question is not subject to deduction under CIS.
3. Deemed contractors
This changes the rules for determining which entities operating outside the construction sector need to operate the CIS. Moving forward, rather than looking back at each year-end to determine the level of construction expenditure, businesses will need to monitor that expenditure more regularly and apply the CIS when construction expenditure exceeds £3 million within the previous 12 months.
4. CIS registration penalty
This tackles the supply of false information when applying for gross payment status (GPS) or payment under deduction within the CIS.
Individuals or companies will now be liable to a penalty if you influence or control a person and encourage that person completing the application to submit a false statement or false paperwork, or you yourself when completing an application submit false information or paperwork.