HM Revenue & Customs (HMRC) launched a new Construction Industry Scheme (CIS) compliance programme on 24 September 2026, targeting three high-risk areas: false self-employment classification, verification procedure failures, and gross payment status abuse. The programme deploys 120 additional compliance officers across 12 regional hubs, utilizing data analytics from the Real Time Information (RTI) payroll system, VAT returns, and the CIS verification database to identify contractors who systematically misclassify workers as subcontractors to avoid PAYE and NICs obligations. HMRC estimates the tax gap from CIS non-compliance at £1.8 billion annually.
Key Takeaways
- Employment Status Scrutiny: HMRC will apply the ‘IR35-style’ status tests (control, substitution, mutuality of obligation) to CIS engagements, with a presumption of employment where the worker provides labor only and uses the contractor’s tools/equipment.
- Verification Mandate: Contractors must verify every subcontractor via the HMRC online service before first payment; failure to verify triggers the 30% deduction rate and is now a standalone penalty trigger (£300 per failure, up to £3,000 annually).
- Gross Payment Status Review: HMRC is reviewing all 45,000 subcontractors with Gross Payment Status (GPS), with immediate revocation for those with late filing/payment records in the last 12 months—estimated to affect 12% of current GPS holders.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement