CISR83020 - Compliance: Regulation 9(5) directions: Direction under ‘Condition A’ at Regulation 9(3)
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The focus of the guidance in this paragraph is for those not authorised to act as Collectors. Those authorised to act as Collectors should consult CISR83030.
SI2005/2045 reg 9(5) says that an officer of Revenue & Customs may direct that a contractor is not liable to pay the excess to the Commissioners for Her Majesty’s Revenue & Customs.
Before making the direction the officer must be satisfied that ‘Condition A’ at Regulation 9(3) is fulfilled, this is that
- the contractor took reasonable care in the operation of the deduction scheme
- the under-deduction or failure to make a deduction was an error made in good faith
- despite taking reasonable care the contractor was led to the genuine belief that the law did not require a deduction to be made from the payment or the part of the payment in question.
You must also ensure that the contractor’s liability has not already been included in a Determination under Regulation 13(2) of SI2005/2045 (see CISR82000).
Contractor’s processing office
Requests for Regulation 9(5) directions need to be dealt with by the contractor’s Processing Office and can only be made by a Higher Officer there.
The purpose of this provision is to give HMRC the discretion to take into account mitigating factors which might excuse a contractor’s failure to operate the Scheme correctly.
You are most likely to receive requests for directions under Regulation 9(5) in the following situations
- in response to a letter warning of an intention to make a determination under Regulation 13(2)
Simultaneous representations for a direction under Regulation 9(5) quoting both ‘Condition A’ - Regulation 9(3) and ‘Condition B’ - Regulation 9(4)
Contractors may make representations for relief under both provisions of Regulation 9 at the same time. In this case the officer authorised to act as a Collector, should consider the case initially.
If the officer is satisfied by the evidence supporting ‘Condition A’ at Regulation 9(3) they will make a decision in the contractor’s favour, and a Regulation 9(5) direction may be made. In this case there will be no need to pursue the question of whether ‘Condition B’ at Regulation 9(4) (see CISR83050) is also satisfied.
If the officer cannot resolve whether ‘Condition A’ at Regulation 9(3) is satisfied, they will defer making a decision and refer the request for a direction under Regulation 9(5) to the subcontractor’s Processing Office to consider whether ‘Condition B’ at Regulation 9(4) (see CISR83050)is satisfied. If it is then a Regulation 9(5) direction may be made. Similarly, papers may be referred to the subcontractor’s Processing Office by a compliance officer where a request for Regulation 9(5) direction is made to them quoting ‘Condition B’ at Regulation 9(4) (see CISR83050).
There is a provision for a contractor to appeal under Regulation 9(7) against an Inspector’s refusal to make a direction under Regulation 9(5) ‘Condition A’ only. The appeal should be made in writing to HM Revenue & Customs within 30 days of the refusal notice specifying the grounds for the appeal.
Note: Guidance on the co-ordination of requests for Regulation 9(5) directions and Regulation 13(2) determinations can be found at CISR83040.