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HMRC internal manual

Construction Industry Scheme Reform Manual

Deductions: credit and repayment: subcontractor / contractor disputes over deductions

CISR72000 Information contents

This action guide explains the steps you should take to deal with disputes between subcontractors and contractors over deductions made under the Scheme.

  1. Ask the subcontractor to send you a statement setting out their reasons for considering the deduction to be excessive or inappropriate.
  2. Consider the subcontractor’s claims in light of HMRC’s stated policy with regard to the scope of the Scheme (See CISR11000 onwards) and/or the meaning of ‘materials’ as appropriate. There is more information on this at CISR15060.
  3. Write to the contractor’s Employer’s Section including the following
* a copy of the subcontractor's statement
* an expression of your views on the case
* a suggestion that the contractor's processing office approach the contractor to check the information provided by the subcontractor
* a request that they report their findings to you.
  1. Where you cannot agree a proposed settlement of the dispute, the contractor’s processing office technical support HO should submit a report with all supporting papers for both parties to the CIS Technical Support Team located in Local Compliance for their direction on the case.
  2. Once you have established HMRC’s proposal for settling the dispute, write to the subcontractor to explain it.

If repayment is necessary, ask for the Payment and Deduction Statements (PDS) covering the payments.

  1. If the proposal is accepted and repayment is necessary, proceed as follows
* follow the steps at [CISR73030]( to check the PDS
* arrange for prompt repayment of the relevant amount
* make a note in the subcontractor's papers regarding any partial repayment of an amount vouched on a PDS. To do this, obtain a print of the relevant contractor’s monthly return and note the credit/repayment details alongside the relevant payment and deduction entry.

If the proposal is accepted and no repayment is appropriate, take no further action.

  1. If the subcontractor or contractor is unwilling to accept the proposal they are each entitled to apply to the tribunal. If this happens, the officer preparing the case for a tribunal hearing should refer the papers to the CIS Advisory Team (See CISR97030) before taking any further action.

Once the final determination is made, take the appropriate action from the above.