Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: CIS: contractor's response: contractor advises of cessation

In-year PAYE/subcontractor scheme

If you are advised that a contractor has ceased, ask if this also applies to the PAYE element of the scheme.

Both PAYE and subcontractor element ceased

If the scheme has ceased for both PAYE and CIS the procedures for the PAYE element remain unchanged:

  • ask the contractor to make all payments (both PAYE and CIS deductions) including any penalties up to the date of cessation and submit the P35
  • request that all CIS monthly returns to the date of cessation are sent in.

When you are calculating the total tax and NIC outstanding you need to take the figures from the P35 and add these to details from the individual CIS monthly return figures.

CIS will be updated with details of the cessation and continue the normal course of action for pursuing any outstanding returns and penalties up to the date of cessation.

If there are CIS penalties raised for the period endings after the date of cessation then send a WAM to the CIS team in Newry to advise the date of cessation and request those post cessation CIS penalties are vacated. Follow the guidance on sending a WAM to Newry.

Subcontractor part ceased

If only the SC part of the scheme has ceased:

  • issue P212 to the Employer section
  • ask that the scheme be amended to a P scheme for the following tax year.

Normal course of action to pursue any outstanding returns and penalties up to the date of the cessation will continue.

If there are CIS penalties raised for the period endings after the date of cessation then send a WAM to the CIS team in Newry to advise the date of cessation and request those post cessation CIS penalties are vacated. Follow the guidance on sending a WAM to Newry.

In-year subcontractor case only

If the contractor advises you that his scheme has ceased, issue P212 to the Employer section.

New CIS will be updated with details of the cessation and continue its normal course of action for pursuing any outstanding returns and penalties up to the date of the cessation.

If there are CIS penalties raised for the period endings after the date of cessation then send a WAM to the CIS team in Newry to advise the date of cessation and request those post cessation CIS penalties are vacated. Follow the guidance on sending a WAM to Newry.

At the end of the year, details of returns and payments will be passed to BROCS to deal with end of year accounting.

Delays in setting the Cessation signal

If your experience tells you there will be delays in processing the cessation advise the contractor to either:

  • ring the CIS helpline to register the period of inactivity
  • complete box 8 on the next return (box 8 is a declaration stating that the contractor does not anticipate paying contractors for the next six months).

We can not register this period of inactivity ourselves it must be done by the contractor using one of the methods above.

One point to note is that if the contractor completes box 8 on the return the inactivity signal will be set for six months at a time only. If the contractor rings the CIS Helpline the period of inactivity could be extended to the end of the tax year. Useful information is contained in CISR67010.