HMRC has updated its guidance CIS 340 to reflect changes introduced to the construction industry scheme (CIS) from 6 April 2021 to prevent abuse of the CIS set-off process.
The revised guidance covers:
changes to the deemed contractor rules, which now provide that businesses or other concerns will be counted as contractors when they have spent over £3m on construction operations within the previous 12-month period;
changes that allow HMRC to correct CIS deductions figures claimed by a subcontractor and to prevent subcontractors from being allowed to set off CIS deductions for a period, and that enable the subcontractor to ask HMRC to review the decision and appeal to the tribunal;
extension of penalties for providing false information when registering for payment under deduction or gross payment status, to individuals or companies that are found to have exercised influence or control or encouraged a person to supply false documents and make a false application; and
clarification that a materials deduction can only be made by the subcontractor that has directly purchased the materials.
Legislation to bring in these changes was included in Finance Bill 2021 Sch 6 and is intended to apply from the start of the 2021/22 tax year, although the extension of penalties to those exercising influence or control will have no effect in relation to statements made, or documents provided, before 6 April 2021.
HMRC has updated its guidance CIS 340 to reflect changes introduced to the construction industry scheme (CIS) from 6 April 2021 to prevent abuse of the CIS set-off process.
The revised guidance covers:
changes to the deemed contractor rules, which now provide that businesses or other concerns will be counted as contractors when they have spent over £3m on construction operations within the previous 12-month period;
changes that allow HMRC to correct CIS deductions figures claimed by a subcontractor and to prevent subcontractors from being allowed to set off CIS deductions for a period, and that enable the subcontractor to ask HMRC to review the decision and appeal to the tribunal;
extension of penalties for providing false information when registering for payment under deduction or gross payment status, to individuals or companies that are found to have exercised influence or control or encouraged a person to supply false documents and make a false application; and
clarification that a materials deduction can only be made by the subcontractor that has directly purchased the materials.
Legislation to bring in these changes was included in Finance Bill 2021 Sch 6 and is intended to apply from the start of the 2021/22 tax year, although the extension of penalties to those exercising influence or control will have no effect in relation to statements made, or documents provided, before 6 April 2021.
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