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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: secondary legislation: regulation 11

This regulation deals with the notice and certificate procedures where, 17 days or moreafter the end of a tax period, either of the following conditions apply: (A) thecontractor has not paid any amount during the tax period and HMRC believes an amount isdue for that tax period; (B) the contractor has paid an amount of deductions over duringthe period but HMRC is not satisfied, after seeking the contractor’s explanation,that it is the full amount: SI2005/2045 reg 11(1), (2) and (3).

If either of the conditions are met, HMRC can look at the contractor’s previouspayment record and specify, to their best judgement, an amount which they consider is dueand payable and may serve a notice on the contractor requiring that amount to be paidwithin 7 days of the issue of the notice: SI2005/2045 reg 11(4).

If condition (A) is met in respect of two or more consecutive tax periods in a tax year,HMRC can give notice under (4) as if the consecutive periods were the latest tax periodspecified in the notice: SI2005/2045 reg 11(5).

If, during the notice period, the contractor claims that they have paid over the fullamount of deductions but HMRC are not satisfied, the contractor can ask HMRC to inspectthe contractor’s records as if they had been required to produce them underSI2005/2045 reg 51: SI2005/2045 reg 11(6).

Where HMRC does inspect the records in accordance with SI2005/2045 reg 11(6) andSI2005/2045 reg 51, any notice issued by HMRC under SI2005/2045 reg 11(4) is to bedisregarded: SI2005/2045 reg 11(7).

Any amounts unpaid at the end of the period of the notice made at SI2005/2045 reg 11(4)are treated as though they were due in accordance with SI2005/2045 reg 7 and HMRC canprepare a certificate showing amounts unpaid: SI2005/2045 reg 11(8).

If, during the notice period, the contractor settles all outstanding amounts or satisfiesHMRC that no monies are due, then SI2005/2045 reg 11(8) does not apply: SI2005/2045 reg11(9).

If the contractor settles the amount certified by HMRC and it transpires that the amountdue was a lesser amount, the contractor is entitled to offset any excess monies againstsums due for a later tax period in the tax year: SI2005/2045 reg 11(10) and (11).

Sub-section (12) refers to SI2005/2045 reg 57 which deals with the use of certificates asevidence of sums due and payable.