As of April 2022, companies will have to meet a new requirement to be able to reclaim Construction Industry Scheme (CIS) deductions suffered. There will be new validation and error messages being added to the Employer Payment Summary (EPS) for CIS claims, and this measure has been put in place as part of HMRC’s strategy to tackle CIS abuse.
CIS claims above £0.00 will be require an associated Corporation tax Unique Taxpayer Reference (UTR) to be added to the EPS new data field. Attached to this will be a validation where the EPS risks being rejected if the Corporate Tax UTR is not recognised or if there is no eligibility to make off-set claims under the CIS in that tax year.
Construction Industry Scheme
Construction Industry Scheme (CIS) deductions suffered can be reclaimed by incorporated contractors through off-setting the deductions against CIS deductions made from payments to subtractors and/or PAYE and NIC deductions made from their employees. The reclaim is then processed through the company’s payroll and the EPS.
HMRC has shown concern for many years due to the possibility of fraudulent activity connected with businesses who claim CIS deductions through their EPS RTI return.
Concerns have arisen where:
- The business does not operate within the construction industry
- The contractor is not an incorporated business
- The claimed deductions have not actually been suffered/have been lied about
- The claims are emphasized
Due to these concerns, there were some changes made in April 2021, where legislation was introduced to enable HMRC to edit a contractor’s EPS when:
- Evidence has not been provided for the CIS deductions suffered
- EPS is not amended by the contractor to reflect the correct amount of CIS deductions being reclaimed
Where HMRC does amend the EPS, it will result in a potential underpayment which can then lead to interest and late payment penalties being charged where any resulting underpayment is not settled with the next routine PAYE remittance.
If you need advice with your CIS claims, please get in touch with us at firstname.lastname@example.org