The CIS requires many businesses carrying out construction work to deduct tax (at either 20% or 30%) before paying subcontractors unless the supplier has gross payment status (GPS), which HMRC will grant to subcontractors who show a good record of tax compliance.
From 6 April 2024, VAT obligations are added to the statutory compliance test for being granted (and for keeping) GPS. The measure also extends one of the grounds for immediate cancellation of GPS. HMRC is able to withdraw GPS if they have reasonable grounds to suspect that the GPS holder has fraudulently provided an incorrect return or incorrect information in relation to a list of taxes which will be extended to include VAT, Corporation Tax Self-Assessment (CTSA), Income Tax Self Assessment (ITSA) and PAYE.
Other reforms, also to come in from 6 April 2024, are:
- The removal of the majority of landlord to tenant payments from the scope of the CIS
- Digitalising applications for CIS registration
- Bringing forward the first review of a GPS holder’s compliance history from 12 months after application to 6 months, reverting to 12 months thereafter.
If you are looking for advice or support with the Construction Industry Scheme, please contact our EQ Property & Construction team at property@eqaccountants.co.uk or contact one of our offices.