HMRC is writing to contractors and asking them to regularly verify the construction industry scheme (CIS) status of their subcontractors.
HMRC’s records show that some contractors have made incorrect CIS tax deductions. As part of its latest one-to-many campaign, HMRC is reminding contractors that they must:
verify all new subcontractors before they pay them;
verify subcontractors they’ve used before if they haven’t included them on a CIS return in the current tax year, or the previous two tax years; and
make sure they apply the correct CIS deductions.
HMRC says that it may open a compliance check if the contractor does not take any action. If HMRC starts a compliance check and finds errors in a CIS return, it will treat a disclosure made by the contractor as prompted. This could increase the amount of any penalties the contractor may have to pay.
When verifying through COINS, please ensure the verification completes fully with a tax status applied at the end. If a verification gets stuck or fails, then payment should not be made to a subcontractor until the verification issue is resolved. If you have stuck or failed verifications, then please raise a ticket and we will help.