Changes to CIS Regulation and Compliance

Within the construction, and more specifically the Construction Industry Scheme, there have been many changes bought in in April 2015 that have altered its regulations. From April 2016 and 2017, there will be more changes, with the details of them outlined below.

Changes from April 2015:

  • Contractors no longer need to submit monthly nil returns when they have not made any payments to subcontractors; as positive as this sounds, there are still negatives to this change. For one, HMRC will not know why no Return has been submitted and will therefore automatically issue a late filing penalty. To cancel the penalty, an appeal will have to be made to HMRC in order to cancel the penalty by reason of no payments been made to any subcontractors during that month. After the appeal HMRC will then cancel the penalty making it beneficial to continually submit no returns on a voluntary basis in order to having to repeatedly go through the appeal process.

  • ‘Compliance test‘ conditions for Joint Ventures has been relaxed; A joint venture does not need to satisfy the ‘compliance test’ where;

  • A business or company forming part of the JV is already registered for gross status and that business or company has a right to at least 50% share of assets or income of the JV

  • OR a business or company holds at least 50% of the shares and voting rights in the JV.

  • Optional use of an online appeals service; HMRC have introduced a service that allows CIS appeals to be made through and online service, though is only available for people who register to use the service.

  • In-year CIS repayments can be made to liquidators of companies being wound up under the Insolvency Act 1986

Changes from April 2016:

  • Online filing of CIS Returns is now mandatory; the majority of contractors will now be expected to submit their monthly CIS Returns electronically. There are a small number of exceptions where HMRC will accept alternative filing arrangements however.

  • All contractors are now expected to make appeals online.

  • The compliance test for gross status has been simplified; the individual self-assessment obligations of the director’s will no longer make up part of the initial or annual compliance test. These are considered when establishing whether or not the company qualifies for gross status

  • Where there are multiple partners or directors, turnover test for gross status has been reduced to £100’000.

From April 2017:

Telephone verification of subcontractors will be withdrawn; all verification of subcontractors will have to be done online.​

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