Guidance

Compliance checks: Construction Industry Scheme – penalties for false registration – CC/FS41

Updated 16 May 2022

This factsheet contains information about the penalty or penalties we’ll charge if you’ve done either of the following to become registered for the Construction Industry Scheme (CIS):

• supplied false information
• provided false documents

This factsheet is one of a series of compliance checks factsheets. For the full list of factsheets in the series, go to www.gov.uk and search for ‘HMRC compliance checks factsheets’.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with this matter, please tell the officer that’s contacted you. We’ll help you in whatever way we can. For more details, go to www.gov.uk/get-help-hmrc-extra-support.

You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend or relative. We may however still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

Registration conditions

To register as a subcontractor for CIS, you must provide business and identity details for:

• payment under deduction
• gross payment status

They must also confirm their turnover from work involving construction operations in the previous 12 months. Turnover means income but does not include the direct cost of materials provided. We may ask for evidence to support information provided during registration. We’ll cancel your registration if you’ve done or influenced another person to have done any of the following:

• supplied information knowing it to be false
• supplied any document which is false
• do not respond to requests for documentary evidence to support your application

This cancellation will take effect immediately.

We’ll also consider a penalty for false registration.

Penalties for false registration

We’ll charge a penalty of £3,000 if you give us, or influence another person to give information or documents about your or their identity, business or turnover:

• recklessly
• that you know to be false, and then do either of the following:
  • give us further false information or documents
  • do not co-operate with us to identify the false details

However, we’ll charge a penalty of £2,000 if either of the following apply:

• you are unable to provide satisfactory documents
• you confirm that your original registration provided false information or documents about either of the following:
  • your identity and business
  • your business and turnover

We’ll charge a penalty of £1,000 if the false information or documents are about any of the following:

• your or another person’s identity
• the business
• the turnover

What happens when we charge a penalty

We’ll send you a calculation of the amount we believe is due. We’ll try to agree this amount with you. We’ll send a penalty assessment notice, or we may ask you to enter into a contract with us to pay the penalty.

If you’ve deliberately done something wrong

We may carry out a criminal investigation with a view to prosecution if you’ve deliberately done something wrong, such as:

• given us information that you know is not true, whether verbally or in a document
• dishonestly misrepresented how much tax you owe, or claimed payments you’re not entitled to

Managing serious defaulters

If you deliberately got your tax affairs wrong, and we find this during the check, we may monitor your tax affairs more closely. We have an enhanced monitoring programme called ‘managing serious defaulters. For more information, read factsheet CC/FS14, ‘Managing serious defaulters’. Go to www.gov.uk and search for ‘CC/FS14’.

If you disagree

If there’s something that you do not agree with, please tell us.

If we make a decision that you can appeal against, we’ll write to you about the decision and tell you what to do if you disagree. You’ll usually have 3 options. Within 30 days, you can:

• send new information to the officer dealing with the check and ask them to take it into account
• have your case reviewed by an HMRC officer who has not been involved in the matter
• arrange for an independent tribunal to hear your appeal and decide the matter

Whichever you choose, you may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve the dispute. We call this Alternative Dispute Resolution (ADR).

ADR is only available for disputes that relate to particular tax areas. The officer dealing with the check will tell you if ADR is available for your dispute.

For more information about appeals and ADR, read factsheets:

• HMRC1, ‘HM Revenue and Customs decisions – what to do if you disagree’
• CC/FS21, ‘Alternative dispute resolution’

Go to www.gov.uk and search for ‘HMRC1’ or ‘CC/FS21’.

Your rights when we’re considering penalties

The European Convention on Human Rights gives you certain important rights. If we’re considering penalties, we’ll tell you. We’ll also tell you that these rights apply and ask you to confirm that you understand them. These rights are that:

• if we ask you any questions to help us decide whether to charge you a penalty, you have the right not to answer them – the amount of help that you give us when we’re considering penalties is entirely a matter for you to decide
• when deciding whether to answer our questions, you may want to get advice from a professional adviser – particularly if you do not already have one
• if you disagree with the cancellation of your gross payment status, or any penalties we believe are due, you can appeal – if you appeal about both cancellation of your gross payment status and penalties, you have the right to ask for both appeals to be considered together
• you have the right to apply for funded legal assistance for dealing with any appeal against certain penalties
• you’re entitled to have the matter of penalties dealt with without unreasonable delay

You can find full details about these rights in factsheet CC/FS9 ‘The Human Rights Act and penalties’.

Go to www.gov.uk and search for ‘CC/FS9’.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for ‘HMRC Privacy Notice’.