Extension of security deposit regulations has arrived

• Government publishes regulations introducing security provisions for CIS and CT from 6th April 2019
• High-risk businesses to provide an up-front security deposit in respect of CIS and CT to protect the revenue

Aspire Comment

The Income Tax (Construction Industry Scheme) (Amendment) and the Corporation Tax (Security for Payments) Regulations 2019 (“the Regulations”) have been published following the conclusion of a consultation which sought views on the extension of the scope of security deposit legislation.

The Regulations outline that, where HMRC believes a business poses a risk to the revenue, a requirement for security in respect of Construction Industry Scheme (“CIS”) or Corporation Tax (“CT”) may arise. The Regulations also set out the appeal process and a process to apply to reduce the amount of security which has been provided. The outcome of the consultation has not altered the Regulations.

Having regard to the Government’s mistrust of the construction sector, we were not surprised to hear that the security deposits legislation was being extended into CIS, however, the extension of the securities legislation should be yet another reason to ensure that your business is behaving compliantly to avoid any additional and unnecessary costs.  It also serves as an uncomfortable reminder that, in operation of a company, past misdemeanours can continue to cause you problems, even in a new corporate entity.   

See our previous related news items;

HMRC powers set to extend for CIS deductions and Corporation Tax

Extension of security deposits into Corporation Tax and the CIS