Supporting Guidance: employer compliance: guidance by subject: construction industry scheme (CIS): regulation 9(4) directions - action to be taken
COG909360 explains the conditions to be satisfied for a direction under Reg 9(5) in relation to a claim under Reg 9(4) to be made.
A contractor does not have to formally request consideration of a claim under Reg 9(4) nor does the contractor have to mention the regulation. In many situations the contractor will merely infer double taxation. This should be considered as a request for a claim under Reg 9(4).
However, Reg 9(4)(b) states that the contractor does not need to make a request for a direction under Reg 9(5). If therefore the contractor does not make a claim or mentions ‘double taxation’ you should make the contractor aware of the existence of Reg 9(4) and invite a claim from the contractor. You do not need, and in fact should not, at this stage give the contractor any indication of the outcome of the claim.
Where during the course of a compliance check it is discovered that a contractor has failed to make a CIS deduction from a subcontractor, you
- should seek an explanation for the failure from the contractor (COG905275) and advise the contractor that even if relief under Regulation 9(5) is granted following a successful claim under Regulation 9(4) Condition B, a penalty for any related incorrect, inaccurate or late filed CIS300 return remains chargeable on the original amount of under-deduction
- must make a referral to the CIS Functional Lead Team (COG909090) on the Reg 9 referral stencil (Word 34KB) and complete the Reg 9(4) summary sheet (Excel 27KB) detailing the relevant information for the subcontractors under consideration.
The CIS Functional Lead Team will consider, prepare and sign any appropriate notice of decision accepting or refusing the claim.
The papers will be returned to you to notify the contractor of the outcome and issue the signed decision notices and proceed to settle the case.
Once the notice of decision has been issued to the contractor you should move to recover the amount of any under-deduction not relieved by a direction either by contact settlement or by issuing the Reg 13 warning letter (COG909400) 30 days after the date the notice of decision was issued. You should then issue the determination after a further 30 days.
There is no right of appeal against a refusal by HMRC to give a direction under Reg 9(5) where ‘Condition B’ of Reg 9(4) is not met.
Provided a Class 6 settlement has not been agreed or a determination under Reg 13 has not already been issued, any new claim, under Reg 9(4) or requests for a refusal to be reconsidered should be considered and if circumstances have changed a further referral to the Functional Lead Team will be necessary.
If a determination under Reg 13 has been issued, new or further claims must not be considered as provided for by virtue of Reg 13(3).