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Tackling construction industry scheme abuse

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The CIOT’s response to HMRC’s consultation Tackling construction industry scheme abuse questions the scope of the consultation which was limited to the implementation of the proposed new provision which is designed to ensure CIS deductions claimed by employers are correct. The CIOT would have liked to see questions on amending the definition of ‘deemed contractor’, on restricting claims for deductions for materials, and the change to the false registration penalty.

On the central deductions point, the CIOT notes that the proposed approach seems a ‘somewhat muted response to what appears to be characterised as a deliberate intent to misrepresent the amount of CIS deductions that a sub-contractor has suffered’ – actions which ‘would seem to be tantamount to fraud’. In essence, a ‘one size fits all’ approach is not the right solution when overclaims can arise in a whole range of circumstances, from genuine mistakes through to deliberate attempts to defraud, so the measures are likely to be both too harsh for the genuine error yet not harsh enough for the fraudster.

Issue: 1499
Categories: News