Cyber security threats are constantly evolving. We’ll work with you to develop and test robust people, process and technology defences to protect your data and information assets.
Working with borrowers and private equity financial sponsors on raising and refinancing debt. We can help you find the right lender and type of debt products.
Regulatory change, pressure on cost management and growth, and increased investment in technology and data are dominating the financial services industry.
Media companies must stay agile to thrive in today’s highly competitive market – we’re here to support your ambitions.
Article
Construction Industry Scheme: HMRC targets insurers
By:
Julie Clarke
09 Aug 20243 min read
The construction sector is often a focus of HMRC activity and a new ‘one to many’ letter campaign aims to make insurers aware of their obligations under the Construction Industry Scheme. Julie Clarke explains who's in scope and what to do next.
Contents
HMRC is writing to large insurance businesses, giving them 90 days to review their position to ensure they're compliant with Construction Industry Scheme (CIS) requirements. The letter warns recipients that if they don't take any action, this may lead to an enquiry.
What HMRC is focusing on and why
The CIS is a tax regime that’s often overlooked due to a misconception that it only applies to construction businesses. The scheme can apply to non-construction businesses who spend more than £3 million on construction operations in any rolling one-year period, however. These are referred to as ‘deemed contractors’.
HMRC is focusing on insurance businesses that may commission construction work – for example on a policy holder’s property – either directly or through a loss adjuster, as they may be in the scope of the CIS.
HMRC says it's aware that some deemed contractors in the insurance sector haven’t registered for the CIS. It's also aware that others have registered but haven’t included payments to loss adjusters on their monthly CIS returns, which partly or wholly cover the cost of commissioning or undertaking construction work.
With significant penalties imposed for non-compliance, it’s important that businesses consider whether they have registration, filing and payment obligations under the CIS.
What to do on receipt of this HMRC letter
The receipt of correspondence from HMRC should always be taken seriously and it should be assumed that HMRC may have information which has led to a concern about the business’s tax position.
Insurance businesses in receipt of this letter need to undertake a review to establish whether they're a deemed contractor and, if so, from when. Any registration, filing and payment obligations will then need to be dealt with and HMRC is giving recipients 90 days to start operating the CIS.
If no action is taken, this may lead to an enquiry and could result in larger penalties being charged by HMRC for non-compliance.
Although the letter says that businesses whose CIS position is in order, or to whom CIS doesn't apply, need not do anything, such businesses should consider responding to explain why this is the case. This will mitigate the risk of HMRC opening an enquiry to check the position. It's important to carefully draft the wording of any response, however, so as not to prompt further concerns and it's recommended to seek specialist advice.
Real world tax solutions from real human beings
Learn more about how our Tax services can help you
Support with Construction Industry Scheme obligations
Our CIS specialists can support you with understanding and dealing with any CIS obligations that your business may have. This includes undertaking a review following the receipt of this letter, registrations with HMRC and support with ongoing monthly CIS obligations where applicable.
Where a response to HMRC is to be prepared, or a disclosure to HMRC is needed to rectify any irregularities, our specialists work closely with our tax dispute resolution team to achieve the best possible outcome for our clients.
