Construction industry scheme

FORTHCOMING CHANGES: At Budget 2025, the government announced that it will legislate in Finance Bill 2026 (also known as Finance (No 2) Bill 2024–26) for the introduction of new powers for HMRC to tackle fraud by businesses operating within the CIS. Modelled on the VAT measures that restrict input tax recovery where the supplier knew or should have known that the supply was connected to the fraudulent evasion of VAT, the new CIS measures will:

1. •

   provide for the immediate cancellation of a business’ gross payment status

2. •

   make a business liable for lost tax, and

3. •

   allow a penalty of 30% of the lost tax to be imposed on the business, its directors, and other connected persons

where it can be shown that the business knew or should have known that it entered into a transaction connected with the fraudulent evasion of tax. Further, the waiting period to reapply for gross payment status that has been immediately removed will be increased from one year to five years.

The government has also announced that it will introduce regulations to simplify the CIS