Construction Industry Scheme: tackling fraud

by Aitch, posted in Construction Industry Scheme

Tackling fraud in the Construction Industry Scheme (CIS) was one of the measures addressed in the recent Budget. The changes are intended to allow faster intervention where fraud is suspected, while also simplifying certain administrative aspects of the CIS.

From 6 April 2026, HMRC will be able to act immediately where a business makes or receives a payment that it knew, or ought to have known, was connected to fraud. In these cases, HMRC will have the authority to withdraw Gross Payment Status (GPS) straight away, assess the business for any related tax loss and impose penalties of up to 30%. Penalties may apply to the business itself or, in some circumstances, to its officers. Where GPS status is removed due to fraud or serious non-compliance, the business will also be prevented from reapplying for five years, a significant increase from the current one-year restriction.

The government also announced plans to simplify the operation of the CIS. Planned changes include exempting payments made to local authorities and certain public bodies from the scheme and reinstating the requirement for contractors to submit nil returns. These measures are expected to take effect from 6 April 2026, following a period of technical consultation.

The CIS applies special tax and National Insurance rules to construction businesses, with contractors generally required to deduct tax from payments made to subcontractors. Deduction rates depend on whether the subcontractor is registered and whether they hold GPS, which allows payment without deductions.

Source:HM Treasury | 26-01-2026
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Aitch
I'm Aitch, the Founder and CEO of CIGMA Accounting Ltd. As a Chartered Management Accountant and as a CIMA member, I've spent more than 16 years helping businesses, entrepreneurs, landlords, and individuals with tax planning, accounting, and HMRC compliance. As a chartered accountant in London, I'm passionate about making complex tax matters easier to understand and helping clients make confident financial decisions. Over the years, I've advised start-ups, SMEs, established companies, and high-net-worth individuals across a wide range of tax and accounting matters. My expertise includes Corporation Tax, Self-Assessment, Capital Gains Tax, Inheritance Tax planning, R&D tax relief, capital allowances, international tax, and resolving complex HMRC compliance issues. Whether clients need a business accountant, tax accountant, or strategic tax advisor, my focus is always on delivering practical advice that creates long-term value. One of my specialist areas is Making Tax Digital (MTD). I've worked extensively with businesses preparing HMRC's digital reporting requirements, helping them move to cloud accounting, improve financial processes, and adopt technology that makes compliance more efficient. I regularly speak at Making Tax Digital roadshows, industry events, and educational sessions in collaboration with Zoho Books, sharing practical insights into digital accounting, tax legislation, and the future of the profession. Many business owners looking for the best accounting firm in London are not simply searching for an accountant they're looking for trusted advice, responsive support, and long-term value. That's the approach I've taken in building CIGMA Accounting. My team and I work closely with businesses across London and the UK, providing accounting services, tax advisory, bookkeeping, payroll, VAT, company accounts, and strategic tax planning tailored to each client's goals. Through this website, I share practical guidance on UK taxation, Making Tax Digital, HMRC updates, Corporation Tax, Self-Assessment, and business finance. My aim is to provide reliable, straightforward information that helps business owners understand changing regulations, reduce compliance risks, and make informed financial decisions with confidence.
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