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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: penalties: CIS from 06-04-07 - providing a subcontractor with an incorrect 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.

A contractor who

  • fraudulently or negligently

provides incorrect written statements may be liable to a penalty under S98(2) TMA 1970. The maximum penalty is £3,000.

Wherever a contractor has provided false information on a payment statement you must

  • establish the reasons why false information was provided COG906110.

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

  • where the contractor has purposely constructed false pay statements to take money from the business or
  • where the contractor and subcontractor have colluded in the use of false pay statements to generate repayments or take money out of the business.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) COG914300(This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

Where a penalty is appropriate you can contact TAA Technical.

TAA will provide guidance on the appropriate amount of penalty to be sought.

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.