The Construction Industry - and the tax rules
The construction sector has its own compliance regime: the Construction Industry Scheme (CIS) and the VAT domestic reverse charge (DRC).
Why it matters
The rules matter because compliance can be linked to the ability to claim gross payment status (GPS) – important to cash flow for many businesses. They also matter because non-compliance can bring financial risk.
Errors can leave contractors liable for tax that should have been withheld from CIS payments to subcontractors. There can be interest when tax is underpaid, and penalties for late payment, and in extreme cases, HMRC can require payment of security from contractors.
For subcontractors, ongoing tax compliance is one of the three tests for GPS and is checked annually by HMRC.
