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HMRC internal manual

Construction Industry Scheme Reform Manual

The Scheme: secondary legislation: regulation 13

This regulation deals with disputes surrounding amounts due and payable.

The regulation applies where

  • the contractor and subcontractor disagree on whether the payment falls within the scope of the scheme: SI2005/2045 reg 13(1)(a)(i).
  • the contractor and subcontractor disagree about the amount to be deducted in accordance with FA04/S61: SI2005/2045 reg 13(1)(a)(ii).
  • HMRC has made an inspection under Regulation 51 and believes that there may be amounts due to be paid over by the contractor: SI2005/2045 reg 13(1)(b).
  • HMRC consider that it is necessary to apply the regulation: SI2005/2045 reg 13(1)(c).

The regulation allows HMRC to use their best judgement in calculating the amount due from the contractor and to serve a notice of this determination: SI2005/2045 reg 13(2).

If HMRC have issued a notice under SI2005/2045 reg 9(5) absolving a contractor from liability on any excess payments found to be due, amounts included in that notice cannot be taken into account on determinations made under this regulation, and vice versa: SI2005/2045 reg 13(3).

A determination under this regulation can cover amounts due for one or more tax periods in a tax year and include a class or classes of subcontractors or one or more named individuals: SI2005/2045 reg 13(4).

In accordance with Parts 4, 5 and 6 of TMA, any determination made under this regulation should be treated as if it were an assessment and as if the amount determined was income tax charged on the contractor. Parts 4, 5 and 6 apply with any necessary modification except that the amount determined is due and payable 14 days after the determination is made: SI2005/2045 reg 13(5).

If disputes over amounts due arise under SI2005/2045 reg 13(1)(a) and HMRC makes no determination under SI2005/2045 reg 13(2), the contractor or subcontractor can ask the Tribunal to consider the matter: SI2005/2045 reg 13(6).

If the circumstances described in SI2005/2045 reg 13(1)(a) apply the contractor is obliged to make the required deduction from the disputed contract payment and must pay this amount over to HMRC and when the final determination of the dispute is made, any excess amounts paid over by the contractor will be treated, except where SI2005/2045 reg 56 applies, as an overpayment of income or corporation tax by the subcontractor: SI2005/2045 reg 13(8)(a) and (b).