Draft legislation and explanatory notes have now been published detailing how the CIS has been simplified so that more sub-contractors can receive gross payments, without deduction of tax.

Under the revised draft legislation, sub-contractors must satisfy the following conditions:

• File monthly CIS returns
• File an income tax self-assessment or corporation tax return
• Pay to HMRC any amounts which they were liable to have deducted from payments to subcontractors

This means that the turnover threshold no longer applies. This was a key point in the Northern Ireland Tax Committee’s submission when changes to the CIS regime were being consulted on back in 2014.

From 6 April 2016, all businesses operating within the CIS Scheme must submit their CIS returns online. Contractors will be required to verify that their sub-contractors are registered with HMRC using the online verification service from 6 April 2017. Until then, verifications can also be made by phone.