CIS Payroll Consultation set for Summer 2014

For contractors or sub-contractors working in the construction industry and registered, or planning to register, on the government’s Construction Industry Scheme (CIS), it may be of interest to know that some changes to the CIS are planned for discussion this summer. HMRC is planning a summer consultation to look at improving and simplifying aspects of the operation of the CIS, some of which will affect areas concerning payroll and the way in which a CIS tax return is submitted.

HMRC have already sought to improve some aspects of the Construction Industry Scheme by working through a Joint Initiative on HMRC Service Delivery, one of these areas being the CIS repayment process. Changes put in place from April 2014 include:

  • the availability of Bacs payment from HMRC on provision of full bank details with submission of claim letters
  • a faster repayment processing time of 25 days from receipt of CIS repayment claims, providing the information on the claim is in agreement with that held by HMRC
  • in the event of a discrepancy within the information, HMRC will need to investigate the inconsistency but still aims to make a part repayment within the above timeframe.

Through this undertaking of improvement HMRC are able to offset CIS repayments against Corporation Tax or VAT debt providing the CIS repayment is large enough to cover the debt and the company informs HMRC that it has submitted a claim for repayment.

The government consultation planned for summer 2014 will look at further options to improve the running of the CIS and the service its customers receive. HMRC has been working with representatives and professional bodies through this Joint Initiative on real cases to develop a better understanding of the direct experiences of both customers and tax agents. They identified several areas of the operation of the CIS and aspects of payroll which require further improvement and investigation, and are planning:

  • the introduction of compulsory online filing for all contractors
  • to make revisions to reporting obligations from larger businesses
  • to simplify the registration process for joint ventures (especially international joint ventures)
  • to improve the operation of the CIS and aspects of payroll in relation to small businesses, in particular addressing the difficulties in achieving gross CIS status and the value of compliance tests. It is possible that an increasing number of companies could move to gross CIS status within the next year and that compliance tests could be reduced.
  • to amend current employment legislation regarding the prevention of “false self-employment”. It will be necessary for intermediaries to operate both PAYE and National Insurance on the payments they make.

These improvements and simplifications to CIS payroll will be under discussion between the government and HMRC this summer. Following the consultation, HMRC plan to work with professional bodies within the industry to develop the recommendations highlighted by the consultation and plan to put the changes into effect from April 2014. This should hopefully mean an improvement to the CIS for all its users and a simplification of its services.

 

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