The Government announced at Spring Budget 2020 a consultation to tackle abuse of the Construction Industry Scheme (CIS). A consultation document was published 19 March 2020 setting out proposals.

HMRC has published a Summary of Responses and the draft legislation which will tackle false claims being made to HMRC. The legislation, and supporting regulations, will give HMRC the power to amend the effect of certain CIS deduction claims on employer returns. Other legislative changes include modifications to the current rules on the cost of materials, deemed contractors and an expansion to the scope of the CIS false registration penalty.

The Government will continue to consider any future supply chain measures in light of the information received from this consultation, as well as other changes to the CIS scheme to protect against fraud and abuse.

The measure is published on GOV.UK alongside details of the draft legislation, and the Summary of Responses. The Government welcomes comments on the draft legislation by 7 January 2021. If you would like to provide a response, please email cisconsultations@hmrc.gov.uk.

The changes to the CIS will be legislated in Finance Bill 2021 and apply from April 2021.