Changes to the operation of the Construction Industry Scheme (CIS) announced at the 2014 Autumn Statement, effective from 6 April 2016, will have only a negligible impact on the administrative burden, HMRC says in a policy paper published today
The changes to CIS include a simpler process for sub-contractors to achieve gross payment status; mandatory online filing of monthly returns and subsequent amendments for contractors; and an improved online verification service for contractors to verify the status of sub-contractors, but this will not be mandatory until April 2017.
HMRC says there will be a negligible one-off implementation cost for these measures mostly due to sub-contractors opting to apply for gross payment status. The estimated average administrative savings in the first five years is £400,000 per annum.
The calculations are based on estimates that around 15,000 subcontractors would be required to move to online submission rather than sending in forms via the post. HMRC says this results in a saving of around £200,000 for 2016-17 reducing to around £100,000 around 2020-21, because of the removal of postage costs.
The new regulations also reduce the amount of record keeping required, for which an annual saving of £19,434 was calculated, along with an annual saving of £30,974 because filing requirements were reduced.
The figures also show there is a one-off cost saving of £1.542m in April 2016. This corresponds to the obligation that in order for a company/sole trader to be entitled to be paid gross they must make an application for a tax certificate to HMRC for approval. The costs calculated for these were £132,000 and £1.41m respectively.
HMRC’s policy paper on the administrative burden impact of the Construction Industry Scheme reform is here