Construction News and Facilities Management Now quote William Turner, Elizabeth Hughes, and Alexander Hemmings on new Construction Industry Scheme rules for supply chain fraud

New Construction Industry Scheme (CIS) rules have come into effect which mean that contractors must be more vigilant about fraud happening in their supply chains. The recent changes to the CIS, which governs tax deductions from payments by contractors to subcontractors, are aimed at streamlining CIS administration and preventing fraud facilitated through CIS payments. 

The new parameters mean that any company found to have known or which should have known it was involved in fraudulent transactions will instantly lose its gross payment status (GPS) with HMRC for at least five years. Directors could also face personal penalties.

This scheme intends to reduce the risk of fraud, and the non-payment of tax. If tax fraud is uncovered in a supply chain, HMRC can make the business liable for any lost tax, including National Insurance and PAYE, which has been evaded by unscrupulous subcontractors.

Elizabeth Hughes, Counsel in our Corporate Tax team, William Turner, Associate, and Alexander Hemmings, Paralegal, both in our Construction, Engineering and Projects team, are quoted in Construction News and Facilities Management Now:  

Not knowing about a subcontractor’s fraudulent tax activities is no defence. To protect their position, contractors and subcontractors should conduct comprehensive due diligence on their counterparties.

Read the full articles in Construction News and Facilities Management Now, and find our team's full insights on the topic here.