Reforms planned for construction industry scheme

HMRC is consulting on whether VAT should be added to the list of taxes HMRC must consider when undertaking the statutory compliance test for receiving or keeping gross payment status (GPS). The current legislation does not allow VAT to be taken into account as part of the test which brings a risk that traders who are not fulfilling their VAT obligations nonetheless are being given gross payment status.

In addition two areas where the scheme may be causing unnecessary administrative burdens are under review: landlord/tenant payments and multiple reporting requirements by some groups.

The landlord currently has to decide whether CIS should be applied to a payment made by a landlord to a tenant and HMRC says the definition of what is and is not a reverse premium has led to difficulty in transactions where businesses would otherwise be completely outside CIS. The consultation proposes...