HMRC collected more than 15 billion through compliance activity in just the first six months of the 2025-26 tax year, with construction identified as one of its primary target sectors. The scale of the crackdown reflects a significant step-up in enforcement, backed by government investment in new technology and the recruitment of an additional 5,500 compliance officers dedicated to increasing the Treasury's tax yield.
At the heart of HMRC's focus on construction is the employment status of workers engaged under the Construction Industry Scheme (CIS). Businesses are being investigated over whether subcontractors and consultants classified as self-employed genuinely meet that definition. In some cases, firms believed their arrangements were sound including contracts drafted by paid third-party advisers only to find HMRC taking a different view, with substantial and unexpected tax liabilities following.
Beyond employment status, HMRC is also targeting technical breaches of CIS rules. One area of concern is the treatment of net-paid subcontractors when calculating payments for plant and materials. These may appear to be minor administrative matters, but HMRC is treating them as grounds for compliance action and the financial exposure for firms caught out can be significant.
For construction businesses the message is clear: the risk of an HMRC compliance visit is higher than it has been for many years. Firms should review how they engage subcontractors, ensure contracts accurately reflect working arrangements, and take professional advice if there is any doubt about whether CIS obligations are being met correctly.
Read more here: https://www.theconstructionindex.co.uk/news/view/hmrc-raised-15bn-in-six-months-construction-in-firing-line
