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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): construction industry tax deduction scheme (CITDS) - background

Whilst the Construction Industry Tax Deduction scheme ceased to exist on 31-07-99 caseworkers were required to include any closed year inaccuracies in respect of CITDS in settlements until 06-04-05. If it is appropriate to extend the time limits for recovery of CIS Deductions (COG915220) CITDs may still be included in settlements after 06-04-05.

Certificated Subcontractors

Under the CITDS a subcontractor could only be paid gross if they were the holder of one of the following certificates (commonly known as exemption certificates or 714s).

714I - issued to individuals who were sole traders

714S - issued to individuals who were sole traders with a restriction of £150

714P - issued to individuals who were partners in subcontracting Firms and to most company directors for use on behalf of the company

714C - issued to companies whose directors are not issued with a certificate 714P.

715 Vouchers

Following payment the subcontractor (apart from companies) was required to hand to the contractor a form 715. The 715 was a pre-printed personalised voucher which contained details of the amount paid exclusive of VAT. The contractor was then required to send the 715 voucher monthly to the Processing Certificate Centre based in Liverpool.

Uncertificated Subcontractors

If the subcontractor did not hold a valid exemption certificate the contractor was required

  • to make deductions at the prescribed rate.

The contractor had to

  • record all payments, materials and deductions on forms SC11 (or equivalent)
  • pay the deductions over with the monthly PAYE/NIC remittance, and
  • complete a form SC35 at the end of the year and submit this with the forms SC11 to the appropriate Employers Section.

The following items were excluded from the payment

  • VAT
  • materials bought by the subcontractor used in construction operations
  • any Construction Industry Training Board CITB levy.

Any payments in respect of travelling and subsistence were to be included in the gross payment and subjected to deductions.

Form SC60

The three part form SC60 was a deduction certificate completed by the contractor and given to the subcontractor as evidence of deductions. The subcontractor would submit the forms SC60 with his SA return and claim the credit for the deductions suffered.