Draft Scottish Fiscal Commission (Modification of Functions) Regulations 2016 - CIOT comments
Although the reverse premium exclusion provides an exemption for landlord to tenant payments for tenants‚ fit-out works, it is of limited and sometimes uncertain application.
The CIOT is aware from our members and other practitioners that some landlords have received clearances confirming that HMRC do not regard payments made by landlords to tenants in connection with the grant of a lease, whether for tenant‚ s fit out works or for landlords‚ works as payments in respect of which landlords need to operate CIS.
However, a number of landlords currently operate CIS in relation to payments made to tenants on the basis that either the reverse premium exclusion does not apply on its terms or there is uncertainty as to whether it applies.
The CIOT has therefore written to HMRC requesting clarification. If the policy approach is that payments made by landlords to tenants in connection with a grant of a lease whether for tenants‚ fit out works or for landlord‚ s works is outside CIS, we requested that HMRC‚ s guidance is clarified and that the Income Tax (Construction Industry Scheme) Regulations 2005 (SI 2005/2045) are amended to reflect the policy intent at the earliest opportunity.