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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: penalties: CIS from 06-04-07 - failure to provide a subcontractor with a written statement of payments and deductions made

Regulation 4(8) Income Tax (Construction Industry Scheme) Regulations 2005 requires a contractor to provide a written statement of payments to each subcontractor no later than 14 days after the end of each tax month. This statement is often called a payment statement. The statement must include the information detailed at COG910050.

Note: The Regulations do not require contractors to keep a copy of written statements so your ability to prove the contractor has failed to provide a statement may rely on using questioning techniques to determine if he has an adequate system in place to provide statements.

A contractor who fails to provide written statements in accordance with Regulation 4(8) may be liable to a penalty under S98(1)(b) TMA 1970.

This penalty consists of an initial penalty not exceeding £300 followed by daily penalties not exceeding £60 per day until the failure is remedied.

The initial penalty is determined by the First-tier Tribunal and can be sought even after the failure is rectified. Daily penalties can be authorised by an Authorising Officer but only as long as the failure continues.

You must

  • consider these penalties where a contractor has failed to provide written statements to subcontractors
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

Although the legislation provides that this penalty can be sought in addition to any penalty, for example an incorrect return COG914300, it is unlikely that both would be pursued where the penalties are arising from the same inaccuracy.

Where a contractor is also a subcontractor and is registered for Gross Payment you must consider whether any failure to comply with CIS is sufficient to warrant a change in tax treatment. Further guidance is at

  • COG910110 Cancellation of Gross Payment Registration.

In cases of doubt or difficulty

  • seek advice from TAA Technical - see COG904770.