Save content
Have you found this content useful? Use the button above to save it to your profile.
iStock_construction_hxdyl

Construction Industry Scheme changes land

by
1st Apr 2016
Save content
Have you found this content useful? Use the button above to save it to your profile.

Following consultation in 2014, the latest set of changes decided upon by HMRC are about to take effect, writes Howard Royse.

By far the most significant of these is the move to mandatory online filing of monthly CIS 300 returns. There has been a steady move away from the submission of paper returns by contractors and now HMRC has decided that the minority must comply with the norm. To be fair though, disputes over late-submitted returns have tended to involve paper versions. Therefore around 20,000 contractors (or potentially, their agents) ought to have made preparations for this new method, or need to act very quickly.

Ignoring this new regime is not recommended. There are some exceptions that need to be agreed with HMRC beforehand, where online submissions are impractical due to age or ill-health. HMRC has promised to be understanding in respect of areas of poor broadband service, but as with cash flow, its policy is that this would be for exceptional circumstances – contractors are expected to manage what are normal situations.

Where this leaves the outcome of the case of Scotts Glass & Glazing Services v HMRC 2011, is unclear. The first-tier tribunal held that HMRC was obliged to accept photocopied templates of paper returns as the contractor’s submission. Therefore if HMRC is able to cope with exceptions or agreed situations such that paper returns can be processed... but it would be a brave contractor that attempted that course of action, and probably quicker in the long run to learn about online submissions.

Amendments and corrections to monthly CIS returns will also have to be made online. In the event of a penalty being issued by HMRC (by post) for a late or non-compliant return, the appeal can be lodged online. No penalties are charged for late nil returns, but it is probably good discipline for contractors to submit returns monthly, even if they are nil returns.

The parameters for the retention of or granting gross payment status to contractors have been rationalised such that for the 12 months preceding the review by HMRC, contractors must have submitted all monthly CIS returns on time, have made all due payments for PAYE, NI and CIS on time and all due income tax or corporation tax payments on time. If only the same conditions applied for HMRC making repayments of tax. The main change here is that the SA compliance record of the directors of contractor companies is no longer taken into account.

The minimum turnover threshold for gross payment status – excluding materials – remains at £30,000 per principal (sole trader, partner or director) unless there are many such interested parties, when the minimum reduces from £200,000 to £100,000. HMRC should now have its software in place such that partnerships can register for CIS online.

When last checked, HMRC was on course for establishing the digital record by April 2017, such that subcontractors can check their CIS deductions online. Until then, the deduction certificates must still be issued by contractors.

Howard Royse is the ICAEW lead on CIS and author of “Construction Industry Scheme – Guidance and Commentary” published by Claritax Books.

Replies (1)

Please login or register to join the discussion.

By Robert Lovell
01st Apr 2016 12:44

CIS comment from Sage

Sage recently looked at the upcoming changes to CIS legislation in a blog post.

AccountingWEB contacted the software giant to find out how important they thought the changes are and the impact on accounting professionals.

Sage said: “The biggest change in these third set of planned changes for business users is that they can no longer submit corrections to returns via telephone and need to use third party software to do this or go directly to the government gateway.

“Business users also need to be aware that resubmitting a return will overwrite the previous returns submitted so they need to ensure that their corrected return includes the total entries they wish to make on their return.”

For more info take a look at Sage’s recent blog on the topic.

Thanks (0)