New research shows that 40% of HMRC's list of deliberate tax defaulters are involved in engineering and construction. Gross Payment Status (GPS) is conditional on tax compliance, new Construction Industry Scheme (CIS) registration tests apply from 6 April 2024.

Construction site

HMRC publish 'Current list of deliberate tax defaulters' and the research found that of 601 cases listed, 236 were in the trades such as engineering, building and construction.

The next sector to make up a significant proportion of decisions was the hospitality and food industry at 23%.

Leading the fine scoreboard at £4,225,949 in penalties is a building company specialising in the renovation of commercial and domestic buildings. In perspective, the next highest fine was £1,409,449.83 from a company listed as 'Security Services'.

From 6 April 2024, Finance Act 2024 makes changes to the Construction Industry Scheme (CIS) gross payment status registration tests.

The ability to be paid gross under the CIS scheme is as a result of making a claim for GPS, this is conditional on a person's tax compliance history.

  • HMRC has powers to immediately cancel GPS where a taxpayer has fraudulently provided an incorrect return or information, in respect of self-assessment (i.e. both Income Tax or Corporation Tax) PAYE and VAT.
  • Pre-6 April 2024 failures will not constitute grounds to cancel GPS. Post-6 April 2024 failures will be considered for both existing GPS holders and new applicants. 
  • Where there is a reasonable excuse for errors, GPS will not be removed.
  • Small businesses which are not VAT registered will not be denied GPS on those grounds.

There are some brighter changes afoot for the CIS:

  • HMRC is due to make changes to the regulations to ensure that the majority of payments from landlords to tenants will be removed from the scope of CIS.
  • A digital application process for CIS registrations will be introduced alongside the existing postal process.
    • Telephone applications will only be available to the digitally exempt.
    • Digital will ultimately be mandated as the only channel for CIS applications.

Useful guides on this topic

CIS: Contractors and Subcontractors
What is the Construction Industry Scheme? Who does it apply to? How does it work?

Penalties: CIS (Construction Industry Scheme)
When are Construction Industry Scheme (CIS) penalties charged and how much are they?

Construction Industry Contractors and Sub-contractors: Tax Overview
What expenses can contractors and sub-contractors claim for tax purposes? How is their income taxed? Are there special tax and accounting rules for contractors and sub-contractors? What are the VAT rules for contractors? 

CIS: Construction Industry reverse charge
What is the CIS VAT reverse charge? How do you account for VAT? Can you still cash account for VAT? What administrative changes do I need in order to operate the reverse charge? 

External link

Source: Rift Tax

HMRC: 'Current list of deliberate tax defaulters''Current list of deliberate tax defaulters'