HMRC is currently consulting on changes to CIS.

HMRC acknowledges that CIS can cause difficulties for landlords and tenants where they need to distinguish between certain types of works (Category A and Category B works) and that compliance is administratively burdensome resulting in the submission of a large number of nil returns.

In the consultation document HMRC explores solutions to these issues such as excluding expenditure associated with these types of works from the scheme altogether and whether implementation of a “CIS grouping arrangement” would alleviate the administrative burden on property companies and landlords and tenants.

The rationale behind CIS is to minimise tax leakage in the construction sector. The risk against which CIS protects is unlikely to apply, for example, to tenants that are obliged to do the Category A works in leases (i.e. to the structure of the building) where the cost of compliance is disproportionate. That the government has recognised this is welcome.

The consultation ends on the 20th of July 2023.

The consultation document can be found here

If you would like to discuss any of the matters in this note please contact John Dunlop or your usual DACB contact.