Understanding HMRC guidance in the Construction Industry Scheme (CIS)
The financial landscape is continually evolving and staying on top of regulatory changes is vital for any business, especially those operating in industries like construction.
The Construction Industry Scheme (CIS) overseen by HM Revenue and Customs (HMRC) is an area experiencing updates that can significantly impact businesses.
Are you aware of the new changes that came into place on the 6th April?….
Within this blog post, Finance with Flow discusses the recent changes in HMRC CIS and how your business can navigate them effectively.
What changes are now in place?
Gross payment status compliance test
Gross Payment Status is critical for companies working in construction, with the loss of this having potentially drastic impact on cash flows if removed. You need to be aware of this, not only for your own status but also for that of your subcontractors.
VAT Compliance test
VAT has now been brought into the compliance test for obtaining and retaining Gross Payment Status, this means when applying HMRC will look at whether you have filed all relevant returns on time, and made tax payments by their due date.
Annual Reviews
Gross Payment Status will now also be reviewed at 6 months post issuing to ensure you have remained compliant with tax filings and payments, then will switch to the normal 12-month review thereafter.
Any non-compliance could result in the removal of Gross Payment Status.
Should your subcontractor status change, HMRC should notify you, so you can ensure relevant deductions are made. You will need to ensure your subcontractor is detailing out their split of labour and materials accurately, which they may not be used to doing.
Appeals Process
All the usual appeals processes remain as before, giving contractors the opportunity to appeal any decisions made by HMRC.
So what does this mean?
If you subcontractor was to loose 20% of their cash flow how would they cope? Could that then have a knock on effect and impact their ability to fulfil their obligations on your contract?
Are your affairs in order regarding tax filings and payments? If not, we can help you!
Finance with Flow are experts in the Construction industry along with the many and varied regulations, ensuring that you remain compliant.
Contact us today on undercontrol@financewithflow.com or 01206 326620 and let’s chat through your needs. We can shape your success together!
Visit our website to find out more about our services and packages – https://financewithflow.com/packages/
To view all legislation and guidance relating to HMRC construction Industry Scheme (CIS) you can find this on www.gov.uk
