HMRC powers set to extend for CIS deductions and Corporation Tax

17 January 2019


  • Consultation on the secondary legislation to extend the current scope of security deposit legislation to include Corporation Tax and Construction Industry Scheme (CIS) deductions has been published
  • The Income Tax (CIS) (Amendment) and the Corporation Tax (Security for Payments) Regulations 2019 is expected to take effect from 6th April 2019
  • A security deposit can only be requested where it is necessary for protection of the revenue
  • The consultation closing date is 11th February 2019
  • New guidance on corporation tax and CIS securities will be incorporated in Government guidance before the instrument comes into effect

Aspire Comment

This amendment to the legislation gives HMRC the power to require a person to provide security for payment of the sums which are, or may become, due from a contractor under the CIS and a company in respect of corporation tax which it is, or may become, liable to pay. HMRC already has powers to require security for the payment of other taxes, such as VAT, PAYE and NICs.

HMRC’s powers are used in a highly targeted way where a significant amount of revenue is at risk and there is an established history of non-compliant behaviour or evidence of phoenixism.

Extending the powers to CIS and corporation tax will strengthen HMRC’s ability to address similar risks in these areas of the tax system. We are aware that Government see fraud in construction sector supply chains as a significant risk to the Exchequer, therefore, this change, along with the VAT reverse charge in construction set to be introduced in October 2019, should strengthen HMRC’s position to eradicate non-compliance in this sector.

It will be an offence for a person to not provide security within a specified period of time when required. If found guilty of that offence, a person would be liable on conviction to a fine.

Put simply, this measure is another reason to ensure compliance.

To read the secondary legislation click here.