Construction industry scheme: Consultation

2 Apr 2020

colourful VAT image

As announced in the Budget, HMRC have now published their consultation document entitled “Tackling Construction Industry Scheme Abuse”.

This is the next step in HMRC’s activities in relation to perceived fraud in the construction sector. This follows the intended implementation of the new VAT reverse charge regime in October 2020. 

The main proposals being considered are:

  • HMRC to amend Full Payment Submission (FPS) returns where subcontractors have been unable to evidence the amounts being offset against their monthly PAYE/NIC remittances to further restrict such claims for the remainder of a tax year when an adjustment is made by HMRC
  • Changes to the definition of deemed contractors so that rather than using a look-back basis of average spend, it will operate on a rolling three year basis
  • A new system of site registration, similar to that currently operated in Ireland, that require ‘main contractors’ to notify them of their whole supply chain for a particular project or contract

The final date for responses on this is 28 May 2020, with a plan to implement new legislation from April 2021. With the proposed changes, in their current form, likely to have a significant impact on any company working in this sector, it is important that appropriate feedback is given on these proposed changes. We will be making our own response, but would urge anyone impacted by these changes to either feedback directly or give us your comments for our consideration.