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HMRC internal manual

Construction Industry Scheme Reform Manual

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HM Revenue & Customs
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Appeals against refusal or cancellation of Gross Payment Status - working a Tax Treatment appeal

CISR48600 Action guide contents
   

 

When working a Tax Treatment appeal you will need to use the Tax Treatment Administrator role in CIS to view the Tax Treatment Qualification Test (TTQT) results in ‘View Customer’ (See CISR90170) and you will also need to access other systems such as Self-Assessment (SA), COTAX, EBS, BROCS (up to 5 April 2013) and ETMP (from 6 April 2013), in order to confirm the failures TTQT has found.

Where the appeal has been logged NIC&EO Longbenton, you should carry out an initial check on CISR to see if there is an Employer Compliance Review (ECR) open (this is visible in ‘View Customer’ under the Contractor Scheme). Where there is an ECR open, you should liase with the Employer Compliance Officer (ECO) carrying out the ECR to inform them that you have a Tax Treatment appeal for the individual or partner, and see whether;

  • the ECO wishes to work the Tax Treatment appeal as part of their ECR
  • if not, have they identified any Compliance failures which can be taken into account when working the Tax Treatment appeal

Where the failures identified during the TTQT occurred prior to 6April 2007, you may also need to consider whether these specific failures could be regarded as being ‘Minor or Technical’ (See CISR46080) in nature. Note however, that the ‘Minor or Technical’ rule cannot be applied to any failures arising after 5April 2007.

Role of the Decision Maker

The decision maker is not the person who logs the TTQT appeal, but will be the person who examines the grounds of the appeal being made by the appellant. The decision maker will select the appeal through the Work Management system (PEGA) and attempt to progress the appeal as follows:

Uphold the Appeal

The decision maker accepts the grounds of the appeal; it is assumed here that sufficient information has been submitted to enable you to fully consider the appeal.

The Tax Treatment appeal should be determined under TMA70/S54 immediately in favour of the appellant by using the function ‘Maintain TT Appeal’. The action to take on determining the appeal can be found within the Action Guide at CISR48660.

Once this function has been completed the system will issue a CIS320 (Appeal Outcome Letter) to the subcontractor and will only send form CIS316 to the contractors where the type of Tax Treatment appeal was either at initial registration for gross payment status for CIS, or where Gross Tax treatment had been withdrawn without 90 days’ notice (CISR43040).

The reason that CIS316 forms are not issued for subcontractors who previously held gross payment status but who went through a Scheduled Review (CISR49000) is that following determination of the appeal in their favour, gross Tax Treatment for the subcontractor would already have been restored by CISR at the stage when their tax treatment appeal had originally been logged.

Where the appeal is logged and determined on the same day, only the determination letter will be issued. This is because the system will issue only one letter per scheme per day, containing all decisions made on that day.

Action should also be taken to clear the Tax Treatment appeal work item from PEGA.

Tax Treatment Appeal received requiring further consideration

If an appeal requires further information before it can be considered, the appellant should be contacted to obtain this information. It is likely that these enquiries will focus on the grounds for the appeal. The allowable grounds are; reasonable excuse, HMRC admin’ error and ‘other’.

  • Reasonable Excuse - It should be remembered that a reasonable excuse can only exist where an unusual event that could not be reasonably forseen or is beyond the customer’s control prevented them from meeting their tax obligations. See CISR81020which provides an overview of what can be accepted as a reasonable excuse. The customer should also have taken action to remedy the situation as soon as possible after the ‘reasonable excuse’ had expired.
  • HMRC Admin’ Error - This might apply where it is established that there has been a failure of a system or a clerical error to process information within the time frame allowed, or the information received has been incorrectly processed.
  • Other - If the grounds submitted are not fitting to either ‘reasonable excuse’ or ‘HMRC admin’ error’, you should select ‘Other’.

The status of the appeal should be left as ‘Received’ in CISR and any relevant notes made using the [Maintain TT Appeal] function.

In response to your enquiries the appellant may supply information in support of the appeal resulting in an agreement being reached for settlement without the appeal being subject to either an internal review or being heard by a Tribunal. The function [Maintain TT Appeal] should then be used to determine the appeal under TMA70/S54.

Action should also be taken to update the notes on the Tax Treatment appeal work item within PEGA.

HMRC decision Upheld

Where you uphold HMRC’s decision, the appellant should be informed in writing together with the reasons for that decision (this is known as the decision letter). You should set out in the decision letter, the specific failures found, the legislation which governs this area, and the tolerances that HMRC are allowed to apply as set out in Table 3 of Regulation 32 SI2005/2045 (see CISR46080).

The appellant should be offered an internal review of the matter by sending with your letter the ‘request for review of decision’ form to the appellant. There is a template letter for both the decision letter and the ‘request for review of decision’ form that you can use available in SEES under ‘Forms and Letters’ (you will need to install the Employer Compliance and Construction Industry SEES package to be able to access these).

The appellant should be allowed 30 days to take up the offer of an internal review, or to notify the appeal to the tribunal (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . At the same time the status of the appeal should be updated on the CISR record to ‘Withdrawal invited’ using [Maintain TT Appeal] and the appeal [Notes] button.

The decision maker should, at this stage, clear the Tax Treatment appeal work item from PEGA as ‘Complete’, and you will need to use a spreadsheet held centrally at NIC&EO Longbenton (for individuals and partnerships) and the CT CIS Centre Hull (for companies) in order to monitor the various timeframes for the appellant to ask for an internal review, or to notify an appeal to the tribunal.

Appellant does not respond to the offer of review

Where the appellant does not take up the offer of review, or does not notify the appeal to the tribunal within the time limit, the appeal is treated as determined under TMA70/S54 along the lines of the decision given in the decision letter (see ARTG2700). The Tax Treatment will revert to net at the original specified date where the decision is in favour of HMRC. Where, however, there are fewer than 30 days remaining before that date, or the original specified date has already passed, a new date for the change to net will be set for 30 days hence. At the same time, the status of the appeal should be updated on the CISR record to ‘Withdrawn’ using [Maintain TT Appeal] and the appeal [Notes] button.

Role of the Review Officer

Appellant takes up the offer of an internal review.

The appellant will notify their take-up of an internal review using the ‘request for review’ form (already pre-addressed) sent to the appellant with the decision letter by the decision maker. The review officer will call for the appeal papers from the decision maker in order to carry out the internal review. They will also consider whether an extension to the 45 day time limit for carrying out an internal review for the case will be required by agreement with the appellant (see ARTG4600).

The review officer will carry out the internal review of the appeal and notify the customer either within the 45 day time limit (or any other extended time limit agreed between the review officer and the appellant) and issue a review conclusion letter setting out the HMRC final view of the matter (see ARTG4800).

If the review officer upholds HMRC’s decision, the appellant then has the option to notify the appeal to the tribunal within 30 days if they still disagree with the HMRC view of the appeal. If they do not reply, then the appeal should be determined under TMA70/S54 in line with HMRC’s decision (see ARTG2700) 30 days after the issue of the review conclusion letter, (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . If they reply that they accept the conclusion of the internal review then the appeal should be determined immediately under TMA70/S54 in favour of HMRC (see ARTG2700).

The reviewing office will need to use a monitoring system of all internal reviews requested, so that the timeframes for the review are strictly adhered to, and that action is taken to determine the appeal under TMA70/S54 if the appellant does not reply to the review conclusion letter, or does not notify the appeal to the tribunal.

Note; The subcontractor having made an appeal to HMRC, may notify the appeal to the tribunal at any time except during the period where they have taken up the offer of an internal review and until the conclusion of that review.

Role of the Tribunals Caseworker

Appellant notifies appeal to the Tribunal

If an appellant does not agree with the conclusions of the internal review, they can appeal direct to the Tribunal Service (ARTG8200) within 30 days of the conclusion of the internal review. They can also appeal direct to the Tribunal Service after they have made an appeal to HMRC but this must be within 30 days of the issue of the decision letter if they have not taken up the offer of an internal review.

You will know that an appeal has been notified to the tribunal through the HMRC Clearing House, as they will contact the Tribunals caseworker who will be based in one of the Appeal Units who will then call for the Tax Treatment appeal papers from the decision maker and the review officer (where there has been an internal review). The Tribunal caseworker will prepare the case for the Tribunal hearing. For more information on the role of the Tribunal caseworker, see the guidance at ARTG8300.

However, you should note that, for CIS Tax Treatment appeals, it will not be necessary for the Tribunals Caseworker to send an HMRC statement of case to the Tribunals Service in advance of the hearing (see ARTG8300). The case will proceed straight to an oral hearing at a mutually agreeable date to all parties.

At the same time as you are aware that the contractor has notified the appeal to the Tribunal the status of the appeal should be updated on the CISR record to ‘Listed for Personal Hearing’ using [Maintain TT Appeal] and using the appeal [Notes] button.

Following the Tribunal hearing

The tribunal will then decide that the appeal should be either

  • Upheld and action taken to restore (or grant) gross tax treatment
  • Not Upheld.

The appeal administrator will need to use the function ‘Maintain TT Appeal’ to record the final appeal status. See the Action Guide at CISR48700 for further information and also CISR48070 which gives advice on the different appeal determination options.

Once this function has been completed the system will issue a CIS320 (Appeal Outcome Letter) and will only send form CIS316 to the contractors where the type of Tax Treatment appeal was either at initial registration for CIS, or where Gross Tax treatment had been withdrawn without 90 days notice (CISR43040). The reason that a CIS316 is not issued for other cases, is that on logging a Tax Treatment appeal, gross Tax Treatment for the subcontractor would already have been restored at that stage.

When the Tax Treatment appeal is settled and where the subcontractor retains gross payment status as a result of that appeal, then the date of the next tax treatment (Scheduled) review (See CISR49000) originally set will be maintained. The exception to this however, is where that review date is less than 90 days in the future or is in the past, in these circumstances CISR will automatically reset the date for 90 days in the future from the date the Tax Treatment appeal was determined.

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