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Sat October 31 2020

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HMRC survey highlights CIS burden

9 Dec 10 A surprisingly high degree of support for the industry’s new tax scheme has been revealed in an industry opinion poll for HM Revenue & Customs, although 43% of companies find the new CIS regime more bureaucratic than the old one that was replaced in 2007.

Evaluating the Construction Industry Scheme, a report by Ipsos Mori, explored the attitudes and opinions of more than 2,500 contractors of various sizes.

Two thirds (65%) agree that the new scheme is simpler to administer than the old scheme but 43% said that the new scheme takes more time to complete.

Ipsos Mori reports that “it is very encouraging to see that four fifths of the respondents taking part in this survey find that CIS is easy to administer”. It is smaller turnover businesses that are more likely to find it difficult to administer the scheme, the survey found.

Four out of five (81%) respondents agree that CIS is effective in ensuring that construction businesses pay income tax. Businesses also seem to value the scheme with 79% of them agreeing that its existence makes them confident that construction businesses are complying with their tax obligations.

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Some 51% of respondents agreed that the existence of CIS shows that HMRC does not trust the construction industry and just over a half of respondents disagree with the notion that construction businesses will always find a way to avoid paying tax. However, there is a strong minority (30%) that agree with this statement and this helps explain some of the mixed messages received on trust – many respondents may think that HMRC does not trust the industry, but some can also see that there is some justification for the Department to hold this view.

The time spent administering CIS averages three and half hours a month, although it varies greatly across different types of business. Indeed 5% of those who administer CIS themselves said they did not spend any time at all on the scheme (mostly subcontractors). Other respondents said that they spend more than two days on CIS administration. By removing extreme answers, Ipsos Mori says that the modal time spent on the scheme is less than 30 minutes a month. Contractors spend more time administering the scheme than subcontractors. Nearly two-thirds (64%) spend two hours or less a month administering the scheme, although the highest length of time recorded was 18 hours. Over one in five (22%) respondents said that they took three hours or more to complete their CIS administration and these were typically larger turnover contracting businesses.

The biggest changes to reduce administrative time are the removal of vouchers and, for those using electronic methods, the introduction of online filing – these changes decreased the amount of administration for 54% and 45% respectively for those respondents that were asked the question.

The full report is available on the HMRC site.

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