CISR85020 - CIS fraud measures: Section 62A liabilities: Conditions and determination

FA04/S62A applies where the following conditions are met:

  • A person makes a payment under a construction contract, as defined under FA04/S57(2)
  • Before making the payment, the person knew or should have known that a connected party had or would deliberately fail with a requirement to:
    - make or pay a CIS deduction, or
    - deduct or pay an amount due under PAYE regulations

A connected party can be:

  • another party to the contract to which the payment relates, or
  • a party to another construction contract relating to the same construction operations

Where these conditions are met, an officer of HMRC may determine that the person making the payment is liable to pay 20% of the payment made.

HMRC can serve a notice of the determination to the person under Reg 13A of the Income Tax (Construction Industry Scheme) Regulations 2005 (see CISR85110).

For more information on the key principles for ‘knew or should have known’ see CISR85060 and what we mean by ‘knew or should have known’ in this context see CISR85030.

If the above conditions are met, HMRC can also:

  • Charge the person a penalty (CISR85120)
  • If the person is a corporate body or an unincorporated association potentially transfer the penalty to an officer (CISR85150)
  • Immediately cancel gross payment status (CISR85210)