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HMRC internal manual

Compliance Operational Guidance

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HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): walk through tests

The CI Caseworker will explore the systems operated by the contractor at the initial meeting - the talk through of the systems, see COG905000.

Once all of the contractor’s systems have been identified the CI Caseworker will

  • walkthrough each system.

The CI Caseworker will undertake sufficient walk through tests to

  • be satisfied that the system is robust and enables the contractor to meet all of his obligations or
  • determine the extent of any weaknesses in the system and any inaccuracies arising from them.

The CI Caseworker can find assistance on undertaking walk through tests in the Testbank.

Some common walk through tests are:

Scope of the Scheme

The CI Caseworker will

  • select a sample of subcontractors engaged by the contractor and confirm that the CIS has correctly been applied to all work that falls within the Scheme.

Reconciliation Check

The CI Caseworker will

  • select a sample of payments made to subcontractors paid under deduction and confirm that

    • the contractor has entered all payments on CIS300 monthly returns and provided the subcontractor with a payment deduction statement (PDS)
  • the entries in the contractor’s records of payments to subcontractors agree with their accounts.

Omissions and Understatements Check

The CI Caseworker will

  • confirm that the contractors monthly return (CIS300)

    • shows the correct amount of CIS deductions due and
    • does not omit any subcontractor paid during the month
  • confirm that the contractors annual return (CIS36)

    • shows the correct amount of CIS deductions due and
    • does not omit any subcontractor taken on during the year.

Materials Check

The CI Caseworker will

  • select a sample of payments that include direct material costs and confirm that

    • the amount of direct materials is genuine and accurate and
    • that the correct amount has been excluded from the amount of the payment from which CIS deductions have been made.

Payments made to Certificate Holders

The CI Caseworker will

  • select a sample of gross payments made to subcontractors and confirm that the subcontractor held a valid certificate at the date of payment.