Register and maintain subcontractor: turnover test: penalties for false figures
|CISR44600||Action guide contents|
FA2004\S72 provides that penalties may be imposed where an applicant for registration for CIS knowingly or recklessly makes a false statement on the application form:
‘If any person, for the purpose of becoming registered for gross payment or for payment under deduction —
- makes any statement, or furnishes any document, which he knows to be false in a material particular; or
- recklessly makes any statement, or furnishes any document, which is false in a material particular,
he shall be liable to a penalty not exceeding £3,000.’
It is important that subcontractors are deterred from falsely inflating their net turnover or deflating the multiple threshold. You should consider seeking penalties in any case where there is strong evidence that an applicant knowingly or recklessly entered false information.
You should follow the steps in the action guide (CISR44670) where
- evidence checks suggest that construction turnover, materials or the number of relevant persons was wrongly stated,
- the outcome of the application would have been different if correct information had been provided in the first place.
Any response by the applicant to your letter enquiring about the questionable figures should provide useful evidence in event of an appeal.
Whether you get a reply or not, you should consider whether a penalty is appropriate. If you think it is, you should submit the case to CIS Advisory Team (CISR97030) before making any determination.
The CIS Advisory Team will advise whether a penalty is appropriate, and if so, the amount. They will also provide a draft working sheet for the penalty determination and advice on how to proceed in any appeal.
Any penalty determination should be made by the Area Director, or an officer of grade 7 or above.
Ideally, any appeal against a penalty determination should be heard at the same time as any appeal against the cancellation of gross status.