After going through consultation in 2023, the government has announced some significant updates to the Construction Industry Scheme (CIS) that will kick in from 6 April 2024. Let’s dive into the details so you’re all set for these changes.
Gross Payment Status (GPS) – What’s New?
Gross Payment Status lets you receive full payments without tax deductions, boosting cash flow. But there are new rules to be aware of:
VAT Compliance: Now, handling your VAT correctly is essential for getting and keeping GPS. This means you’ve got to be spot-on with VAT filings and payments. The government’s adding this to the existing checks for taxes like PAYE and income tax.
Minor VAT Errors: Don’t worry about small mistakes with VAT. Minor slip-ups won’t lead to losing your GPS. This is to make sure that tiny errors don’t have big consequences.
Stricter Measures for Major Non-Compliance: However, if there’s serious tax non-compliance, GPS can be withdrawn quickly. This is to prevent fraud and make sure everyone’s playing by the rules.
Other Key Changes in the CIS Scheme
Apart from GPS, there are a few more changes you should know about:
Landlord and Tenant Payments: Most payments where landlords pay tenants for construction work are now outside CIS. This simplifies things, especially when tenants are doing the work and hiring subcontractors.
Digital Registration: Registering for CIS? It’s moving online, so it’s going to be quicker and more straightforward.
Earlier Compliance Checks for New GPS Holders: If you’re new to GPS, the government will check if you’re following the rules at 6 months, instead of 12. But after that, it’s back to once a year.
Why These Changes to the CIS Scheme?
The aim is to clamp down on serious non-compliance, especially with VAT, in the construction sector. By tightening up Gross Payment Status requirements and making some processes simpler, the government wants to create a level playing field and protect honest businesses.
Comments from Nick Pilgrim, MD of EEBS
The changes to the Construction Industry Scheme are introduced by Government under the guise of ongoing reform, and, laughably, they say – and I quote directly: “The government remains committed to ensuring that the Construction Industry Scheme (CIS) operates in a way which is easy to comply with and simple to administer”
In reality it’s more compliance, more bureaucracy and more frequent hoops to jump through. At least EEBS can help lighten some of the load – give us a call to see how we can help.