ICB Payroll Policy Advisor, Ian Holloway of i-Realise, reports on CIS abuse

The UK Government is concerned about the abuse of the Construction Industry Scheme (CIS) and is keen to tackle that abuse. As CIS deductions are a large part of many payroll and bookkeeping professionals’ day-to-day lives, it is sensible to report on this logically, culminating in the action that employers will have to take from April 2022.

From April 2021

At the March 2020 UK Budget, a consultation entitled ‘Tackling Construction Industry Scheme Abuse’ was published. This proposed further measures on the perceived abuses of the Scheme already tackled in part courtesy of provisions in the Finance Act 2021, Schedule 6.

In short, one of the measures in Schedule 6 gave HMRC the powers to amend the number of CIS deductions claimed on a sub-contractor Employer Payment Summary (EPS) where they identify or suspect that inaccurate amounts have been claimed.  

It is worthwhile reading HMRC’s Policy Paper dated 26 March 2021 for full details of the changes to the Scheme and the possible impacts on payroll and bookkeeping professionals.

From April 2022

To further support the perceived abuse, on 4 August 2021, HMRC announced changes to the CIS deductions suffered, specifically regarding the data to be provided on the EPS.

From the tax year 2022/23, a new Corporation Tax (CT) Unique Taxpayer Reference (UTR) field will be added to the EPS. This must be completed if there is a deduction suffered value greater than £0.00.  If it is not completed and declared in the correct format, the EPS will be rejected at HMRC.  Further causes for rejection are if the CT UTR is not recognised or the client is ineligible to claim CIS deductions for that particular year.

Payroll/bookkeeping professionals’ action

There are several immediate take-aways from this HMRC announcement:

  • Software developers should be aware of the announcement from the Software Developer Support Team. Double-check that they are aware
  • The HMRC announcement says that the ‘Real Time Information support for software developers’ will be updated with the necessary software information.  At the time of approaching your software developer, check that they are aware of this
  • From April 2022, if there are CIS deductions suffered and declared, you will need the 10-digit Corporation Tax Unique Taxpayer Reference. Gather this information ahead of April 2022 for clients