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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: penalties: CIS from 06-04-07 - failure to make a declaration (form CIS300)

The CIS300 contractor monthly return includes a declaration

  • that none of the contracts to which the return relates is a contract of employment,
  • that each subcontractor on the return has been verified or included on previous CIS returns in the last two years and
  • that the return is correct and complete.

Regulations 4(5)(a) - 4(5)(c) Income Tax (Construction Industry Scheme) Regulations 2005 require a contractor to include this declaration in the return.

A contractor who fails to complete the declaration can be liable to an initial penalty not exceeding £300 followed by daily penalties not exceeding £60 per day until the declaration is made. The provision for this penalty is S98(1)(b) TMA 1970.

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 a Grade 6 officer but only as long as the failure continues.

When a contractor has failed to make a declaration on the return you must

  • explain that a declaration (Word 26KB) is required and
  • request that the contractor complete a declaration but
  • make sure that the contractor understands that the declaration must be true as making an incorrect declaration is a penalty offence.

You must

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

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 Tax Administration Litigation & Advice - see COG904770.

Where a contractor has made an incorrect declaration on the return you must

  • consider a penalty in accordance with COG914285.