We remind construction companies of their responsibility to maintain adequate records in respect of CIS deductions made by contractors from payments they receive and CIS deductions made by them from payments made to sub-contractors.
There have been a number of instances each year where we have had to contact HMRC on behalf of clients for clarification of deductions made by contractors where either the CIS voucher has been lost by the subcontractor or never issued by the contractor. HMRC has usually complied with our requests, however, we’re now finding that HMRC Officers are taking a hard line attitude towards such requests. They are reminding us of your responsibilities to maintain proper records and pointing out that they no longer have the resources to comply with our request for copies of missing vouchers. In the first instance, HMRC are now saying to request this information directly from the contractors concerned.
If the contractor does not provide the information, HMRC now require evidence of your attempts to obtain the missing CIS details before they will comply with a request for themselves to provide the information.
Therefore, in order to ensure that you are properly credited with deductions made from your earnings, you should make certain that you obtain a contractor statement at the end of each month and retain it safely with your records. Any delays in obtaining a statement should be followed up promptly. We are well aware of the current inadequacies in HMRC’s record keeping, but if you are not credited with the correct amount of deductions, the onus is on you to prove that a deduction was actually made, otherwise you will end up paying tax twice on some of your earnings.
November 12th, 2010