Construction Industry Scheme – Tackling Fraud

The Government intends to address fraud in the construction industry by introducing measures targeting businesses that knowingly enter into transactions connected with tax fraud. These measures will have serious implications for businesses that fail to take sufficient action to prevent fraud within their supply chain.

The construction industry has long been subject to tax evasion/fraud and there have been several attempts over the years.

Arguably the Treasuries greatest move to counteract tax underpayment in the construction industry was the implementation of the Construction Industry Scheme ("CIS") regime in the UK in 1971. Under CIS, contractors deduct tax from payments to subcontractors and pay it to HMRC as an advance towards the subcontractor's tax liability. Registered subcontractors are subject to a 20% deduction, while unregistered ones face a 30% rate. Subcontractors can apply for gross payment status, which allows them to receive payments without any