The recent tribunal case involving Evancast (Kent) Ltd (EL) underscores the importance of robust compliance with the Construction Industry Scheme (CIS) and the potential financial repercussions of neglecting due diligence. The ruling revealed that EL, a construction company, failed to meet the standard of reasonable care, resulting in a costly loss of their appeal and liability for almost £930,000 in under-deducted CIS payments.

Key Lessons from the Evancast Case

EL’s approach to handling CIS deductions highlights several critical missteps that serve as cautionary lessons for contractors:

1. Failure to Verify CIS Obligations: EL entered into an agreement with Langdale & Goodfellow (LG), categorising their service as administrative/payroll support. However, EL assumed LG was managing the necessary CIS deductions without verifying this with written confirmation or regular checks.
2. Not Reporting the Agency on CIS Returns: One of the key issues was that EL did not include the agency, LG, on their CIS returns. Furthermore, as the agency did not appear to have Gross Payment Status—EL was still liable for the CIS under-deduction due on the payments made to LG.
3. Assumption-Based Compliance: EL’s reliance on its accountants and the lack of specific feedback from HMRC led to a “no news is good news” approach, which the tribunal deemed inadequate for demonstrating reasonable care.
4. Insufficient Enquiries: The tribunal emphasised that a prudent contractor familiar with CIS requirements should proactively seek specific advice and ensure compliance measures are clearly documented.
   
   

The Role of a Trusted CIS Payroll Partner

Had EL partnered with a reputable CIS payroll company like The Guild, the costly errors and tribunal outcome may have been avoided. Here’s how The Guild ensures seamless compliance:

1. Comprehensive Due Diligence: The Guild conducts rigorous checks to ensure all payments are fully compliant with CIS regulations, giving contractors peace of mind.
2. Clear Documentation: We provide written agreements and detailed records to clearly outline roles, responsibilities, and compliance measures.
3. Expert Guidance: Our experienced team stays up to date with HMRC requirements, ensuring our clients are always aligned with the latest rules.
4. Proactive Support: Unlike a reactive approach, The Guild offer proactive reviews and advice, helping contractors navigate complex scenarios and avoid assumptions that could lead to costly errors.
5. Compliance Assurance: Our systems and processes are designed to protect contractors from the financial and reputational damage of non-compliance, as demonstrated in the Evancast case.

Don’t Leave Compliance to Chance

The Evancast tribunal highlights the risks of inadequate CIS compliance, where assumptions and lack of checks led to severe financial consequences. Partnering with a trusted CIS payroll provider like The Guild ensures that your business avoids these pitfalls and operates with complete peace of mind.

Download the free CIS compliance checklist below – if you need further support on how to safeguard your business against the complexities of CIS compliance, contact us.