Businesses operating within the Construction Industry Scheme (CIS) will be affected by the measures set out by HMRC and effective from 6th April 2021.

Four changes will be applied to CIS rules:

  1. CIS set-off amendment power
    HMRC will be able to amend the CIS deduction amounts claimed by sub-contractors on their EPS (Employer Payment Summary) returns to correct errors, remove claims or prevent certain employers from making further similar claims.
  2. Cost of materials
    The cost of materials purchased to fulfil a construction contract will not be subject to deductions under the CIS only if the sub-contractor has directly incurred the cost.
  3. Deemed contractors
    The rules for determining whether someone operating outside the construction sector should be operating the CIS (deemed contractor). Businesses will need to monitor the level of construction expenditure more regularly and apply the CIS when it exceeds £3 million within the previous 12 months.
  4. CIS registration penalty
    The scope of the penalty was expanded for supplying false information when applying for gross payment status (GPS) or payment under deduction within the CIS. Companies and individuals will be liable to penalties if they are in a position to influence or have control over the person, or they themselves supply false documents or statements for the purpose of enabling another person to register for GPS or payment under deduction.

More information can be found on the HMRC webpage.