Construction Industry Scheme reform
Our response published
17 July 2023
- While there was some support from AAT members for elements of the proposed Construction Industry Scheme (CIS) reform, there was a greater concern over whether the benefit justified the disruption from the changes. While several AAT members welcomed proposals such as adding VAT to the compliance test and copying the VAT domestic reverse charge treatment, there was a shared concern among other members that these changes would simply add more bureaucracy to an already complex system for little benefit.
- The continual changes and reforms to the CIS scheme is already having a serious impact on labour. AAT members have seen many skilled traders deciding to leave the profession or move to another country because of the complexity and bureaucracy of the CIS scheme.
- Sole traders are most impacted by the CIS scheme. The checks and administration sole traders have to carry out for construction work is undermining their productivity in a sector which is so crucial to the economy.
- AAT would recommend HMRC provide better evidence of the benefits to these proposals and to engage effectively with construction workers before implementing the proposals. HMRC need to show that any disruption that will be caused by the changes is outweighed by the benefits it will produce for taxpayers, especially through closer consultation with sole traders and other construction workers.
- AAT supports a digital application process, especially if it makes the turnaround in notification of GPS quicker. However, this must be done in a way that doesn’t put significant cost pressures on the sector through software offering higher priced add-ons. HMRC should work with software vendors to ensure any costs are fair and proportionate.
- Many AAT members were opposed to any landlord to tenant payment being within the scope of CIS as well as to the proposed "grouping arrangement". These AAT members believed this would only add more confusion and complexity to the system.
Related consultation responses
Increasing the scope and powers of the Small Business Commissioner
We agree that the complaints handling function should be expanded, and support proposals that the Commissioner have powers to impose financial penalties.
Tackling Construction Industry Scheme (CIS) abuse
We support the proposed approach to CIS set-offs and the application of interest and penalties, and we cautiously support a site registration scheme.