The Construction Industry Scheme (CIS) obliges contractors to deduct income tax at the rate of either 20% or 30% from some payments they make to sub-contractors who do not have gross payment status.

The construction industry has been hoping that the gross payment scheme will be made available to more businesses and also that compliance costs will be reduced as will the risks of penalties and the loss of gross payment status.

HMRC published a consultation paper proposing several improvements to the CIS on 27 June 2014. These include:

  • simplifying the gross payment test;
  • restricting the verification process to sub-contractors claiming gross payment status; and
  • compulsory online filing of monthly CIS returns from October 2016.

The consultation period ends on 22 September 2014.

Any improvements that make it easier for the CIS to be complied with are to be welcomed.