On 12 November 2020, the government published draft legislation (and accompanying explanatory notes) making changes to the Construction Industry Scheme (CIS). These changes have arisen as a result of the consultation on Tackling Construction Industry Scheme Abuse launched by the government at the March 2020 Budget and, if enacted, will apply from 6 April 2021.
The guidance sets out that the changes have three main aims, which are to ensure that:
- the same rules apply to all those operating within construction;
- CIS applies fairly to everyone who is liable; and
- HMRC can act quickly when the rules are being broken.
The main changes which will implement these aims are in the following areas:
a) The definition of “deemed contractors”;
b) Who gets to deduct the cost of materials;
c) HMRC powers to correct returns; and
d) Registration penalties.
These changes are generally compliance focussed, so businesses will need to check they remain compliant with the CIS rules, but it should not materially alter their position under them.
Please see our article available here for further explanation of the proposals.