HMRC has launched a consultation into simplifying and strengthening the construction industry scheme (CIS).
Stakeholders told HMRC that the scheme is causing "unnecessary" administrative burdens in two key areas: payments by landlords to tenants and multiple reporting requirements for certain contractors.
Currently, many sums paid by a landlord for the benefit of a tenant's business are considered "reverse premiums" and fall outside the scope of the CIS.
However, the definition of what is and is not a reverse premium has led to difficulties in some of these transactions, which can be burdensome for both parties.
The consultation proposes simplifying the treatment of these transactions so landlords can make payments without deductions.
HMRC is also considering legislation allowing large business groups to submit one joint monthly CIS return instead of operating independently.
This may help simplify CIS reporting requirements for areas including the property sector, pension funds and trusts.
Furthermore, the Government will look into how to strengthen gross payment status (GPS) tests to help address fraud and loss of tax in the construction sector.
The proposed changes are designed to allow HMRC to "act quickly" when firms break CIS GPS rules and "level the playing field" for compliant construction businesses.
The consultation will run until 20 July 2023.
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