Autumn Statement 2023 – Construction Industry Scheme (CIS)

Construction industry scheme (CIS)

CIS in its current form was overhauled in 2007, following on from previous similar schemes to combat the perceived large scale tax evasion identified by parliament in the construction industry. The main way this is implemented is by contractors retaining income tax paid to sub-contractors, broadly similar to how tax is deducted by employers.

In certain circumstances gross payment statement may be obtained, meaning that the contractor is not obliged to deduct tax at source. Part of the criteria for gross payment status is that the applicant should uphold its responsibilities to file other taxes correctly.

It has been announced that applicants must also have met their compliance responsibilities for VAT filing and payment in addition to other direct taxes, before being granted approval.

Further, HMRC will now have power to immediately withdraw gross payment status in the case of fraudulent returns in relation to CIS, VAT, corporation tax, income tax and PAYE.

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